Frankfurt: Europe’s economy shrank 0.6 per cent in the first three months of the year as slow vaccine rollouts and extended lockdowns delayed a hoped-for recovery and underlined how the region is lagging other major economies in rebounding from the coronavirus pandemic.
The fall in output was smaller than the 1 per cent contraction expected by economists but still far short of the rebound underway in the United States and China, two other pillars of the global economy.
U.S. Growth figures announced Thursday showed the U.S. Grew 1.6 per cent during the first quarter, with business supported by strong consumer demand. On an annualized basis, the U.S. Grew 6.4 per cent.
The second straight quarter of falling output in Europe, following contraction in the fourth quarter of 2021, confirms Europe’s double-dip pandemic recession after a rebound in growth in the third quarter. Two quarters of falling output is one definition of a recession.
Germany, the continent’s largest economy, shrank by a larger than expected 1.7 per cent as the manufacturing sector was hit by disruption of parts supplies on top of the hit to services and travel from pandemic-related restrictions on activity.
Economists said they expected an upturn in the coming weeks as vaccinations accelerate.
One factor in Europe is a slow vaccine rollout and prolonged lockdowns. Another is less government support for the economy. U.S. President Joe Biden’s USD 1.9 billion relief package, coupled with spending from earlier support efforts, will mean additional cash support of about 11-12 per cent of annual economic output for this year, according to economists at UniCredit bank.
By contrast, the European fiscal stimulus amounts to about 6 per cent of gross domestic product.
AP
