2Q GDP Drop In Perspective: U.S. Outperformed EU and Eurozone
Eurozone GDP dropped 12.1%. Germany’s DW News: “Pandemic’s impact in April, May, and June was worse for the EU than the United States, which reported a 9.5% drop.”
European Union economies have taken a big hit in the wake of the Wuhan coronavirus pandemic, registering their biggest decline in recent history. The eurozone economies, comprising of 19 out of 27 EU member states, reported an annualized GPD decline of 40.3 percent, higher than the annualized drop of 32.9 percent registered in the United States.
This is the fastest rate of decline in the eurozone’s history since it was established 21 years ago. “The eurozone’s gross domestic product fell 40.3% on an annual basis, far exceeding the 32.9% contraction in the U.S. economy over the same period, according to data published Friday,” The Wall Street Journal reported.
Many media outlets pegged the U.S. GDP drop at around 33 percent, while the reported decline in the European economies has between 18 and 10 percent. This has to do with the fact that the U.S. reports its GDP based on quarterly numbers projected at annual rates. As German public broadcaster Deutsche Welle explained, “if the U.S. counted the GDP like Europe does, it would have only fallen by 9.5 percent.”
Deutsche Welle reported eurozone’s historic GDP decline:
The eurozone’s economy took an unprecedented hit due to coronavirus pandemic, with the bloc’s GDP contracting by 12.1% [40.3% on an annual basis] in the second quarter of 2020, EU officials said in preliminary estimates published on Friday.
Only 19 out of EU’s 27 member states use the euro as currency. The hit was slightly milder for European Union as a whole with a contraction of 11.9%.
The pandemic had the largest impact on Spain, the EU’s fourth-largest economy, which saw its GDP plunge by 18.5%.
Spanish Prime Minister Pedro Sanchez was set to meet leaders of the country’s regions later on Friday to discuss rebuilding the economy and distributing EU recovery funds. The latest numbers put Spain in an official recession, as the first quarter of 2020 also saw a 5.2% contraction.
Portugal’s GDP slumped 14.1%. France shed 13.8% of its GDP, and Italy saw a decrease of 12.4%.
EU Economy Commissioner Paolo Gentiloni said “all European countries” suffered unprecedented consequences.
The pandemic’s impact in April, May, and June was worse for the EU than the United States, which reported a 9.5% drop.
Even Germany, which according to the UK’s daily Financial Times “fared better” than the rest of the European economies during the pandemic, contracted by 12 percent so far this year.
The GDP figures come as EU leaders roll out a $880 billion post-coronavirus recovery package. This will allow ailing European economies to get up to $440 billion in grants and similar amount in low-interest loans.
The recovery package will further increase the power of the EU at the cost of the sovereignty of its member states. “The Commission,” EU’s executive arm, “will have powers to raise large funds on the capital markets for the first time and to direct how the spending is allocated,” UK newspaper The Telegraph reported.
Despite the scale of economic devastation, European leadership has refused to make Communist China accountable for the Wuhan virus outbreak. Last month, the EU and China signed a ground-breaking trade deal. “This is the first significant bilateral trade agreement signed between the EU and China,” the EU declared in a statement on July 20.
It is worth noting that German newspaper Bild Zeitung in its April 15 editorial demanded $165 billion in reparations from China for unleashing the pandemic on Germany. With the Chinese virus still disrupting German and European trade, those figures should be much higher today.
[Cover image via YouTube] [The author is a former employee of the German Office for Foreign Trade (formerly BFAI)]
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Comments
Both the EU and China can suck an egg
Go ahead EU, let China in , like Italy, which In the northern Areas one might think they actually are in China, you will all be speaking Chinese very soon…
And they both lie……………. especially about economic measurements methinks.
Clearly, it’s Sweden’s fault.
And the U.K.’s Brexit.
I hope someone does a painting of this photo and puts it up in the White House.
Look, the EU and the Eurozone is similar to the US in its economic makeup. Think of it as a diversified economy spanning several member states. In the US, we did not close our state borders to cross border economic traffic. The EU, on the other hand, did. This gave the US a consumer market advantage. Add to that the fact that the US comprises 27% of the entire world consumer market and this is a huge, repeat a huge, advantage. And, still, by suppressing the domestic consumer market in the US, we still saw a 10% reduction in the GDP, in a single quarter. The only perspective to consider is what a continued shutdown of the US economy, exacerbated by a virtual shutdown of the Global economy, will cost the US.
“2Q GDP Drop In Perspective: U.S. Outperformed EU and Eurozone”
Awww – ain’t that just too bad. 😀
as the reporter noted, the US has a largely service and consumption driven economy. we no longer make much of anything. most hardest hit in the shutdown were/are service sector jobs. restaurants, theaters, hotels, travel and tourism. many of these companies have permanently closed. those jobs are not coming back.
we don’t have a diverse economic base anymore. what little we do make we must be able to sell to our trading partners. if they are hurting, so are we. whether we like it or not, globalism (economic) is here to stay.