Eurozone on brink: Coronavirus lockdowns in Europe trigger worrying economic predictions
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Economists predicted a slump of 2.3 percent across the European Union’s single-currency bloc in the fourth quarter of this year. The gloomy downgrades come after France and Germany were forced to announce new restrictive measures to curb the spread of the pandemic as the second wave spreads across the Continent. Prior to the announcements, the bloc had recovered from its Covid-induced recession in the three months to September.
The Eurozone recorded a quarterly growth in gross domestic product of 12.7 percent as draconian measures were lifted and businesses were allowed to begin operating once again.
A survey of 18 leading bankers and economists, carried out by the Financial Times, found that all but one expected the Eurozone economy to shrink in the final quarter of 2020.
Most were forced to downgrade their predictions having previously forecast growth in the last months of the year.
Infection rates across Europe have soared in recent weeks, according to data published by the European Centre for Disease Prevention and Control.
It revealed that Belgium, the EU’s worst-hit state, saw cases jump from 1,600 per 100,000 people to 1,702 over the weekend – the federal government has plunged the country into a partial lockdown as of today.
The infection rate in the Czech Republic rose from 1,513 to 1,561 per 100,000 and it climbed above 1,000 in both Slovenia and Luxembourg.
Berlin and Paris last week announced tough restrictions in a bid to bring coronavirus cases down ahead of Christmas.
In France, all non-essential shops and venues have been ordered to close and it has been made mandatory to work from home whenever possible.
And Germany has closed all bars and restaurants, as well as recreational facilities such as gyms and swimming pools.
Bruno Le Maire, the French finance minister, said he expected economic activity to drop 15 percent during his country’s latest lockdown.
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His prediction is half the 30 percent hit businesses witnessed during the spring economic shutdown.
Gilles Moec, chief economist at Axa, forecast that if the French lockdown lasted until mid-December “with a moderation relaxation in the run-up to Christmas” it would least to a 7.4 percent quarterly slump in national GDP.
Lena Komileva, chief economist at G+ Economics, said: “Measures may prove slower to lift fully during the long winter flu season, even with the strong but short seasonal boost of Christmas travel and retail activity.”
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And Carsten Brzeski, an economist at ING, warned the threat of future lockdowns could influence consumers’ behaviour.
He said: “There will be more precautionary savings simply because more people will believe there could be more lockdowns into next year even after things are opened up again.”
He forecast a meagre 0.7 percent quarter-on-quarter GDP growth for the Eurozone in the first three months of next year.
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