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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