Coronavirus lockdown measures hammer EU economy

European Commissioner in charge of Economy Valdis Dombrovskis gives a press conference on a banking package to facilitate lending to households and businesses in the EU at the European Commission in Brussels, Belgium, on April 28, 2020, amid the Covid-19 pandemic. PHOTO | STEPHANIE LECOCQ | POOL | AFP

What you need to know:

  • As lockdown measures imposed from March began to bite, the eurozone suffered an even bigger contraction -- of 3.8 per cent -- in the first three months of the year.
  • Eurostat said it was the sharpest quarter-on-quarter drop in gross domestic product since it began compiling the figures in 1995.
  • There was more bad news on the inflation front, with consumer prices rising by just 0.4 percent in April compared with 0.7 per cent the previous month.

Brussels,

The EU economy shrank by 3.5 per cent in the first quarter, official data showed Thursday, the first major indication of the devastation facing the bloc as a result of coronavirus.

As lockdown measures imposed from March began to bite, the eurozone suffered an even bigger contraction -- of 3.8 per cent -- in the first three months of the year, the EU's official statistics agency Eurostat said.

Countries across the EU have drastically curtailed everyday life -- and economic activity -- in a bid to slow the spread of Covid-19, which has killed more than 135,000 people across Europe.

Eurostat said it was the sharpest quarter-on-quarter drop in gross domestic product since it began compiling the figures in 1995.

Compared with the same period last year, GDP was down 2.7 per cent across the EU and 3.3 per cent in the 19-member single currency zone -- the biggest declines since the height of the global financial crisis in 2009.

INFLATION

There was more bad news on the inflation front, with consumer prices rising by just 0.4 per cent in April compared with 0.7 per cent the previous month, driven by the collapse in energy prices.

The European Central Bank calculates that inflation rates of close to but just below 2.0 per cent over the medium term are conducive to sustainable economic growth.

The grim EU figures came amid a litany of national woe around the bloc.

France officially fell into recession on Thursday, announcing a staggering 5.8-per cent contraction in the first quarter -- the worst performance since the national statistics agency began recording data in 1949.

In Spain -- the eurozone's fourth-largest economy and one of the worst-affected countries by the virus -- GDP shrank by 5.2 per cent.

Even normally stable Germany, Europe's economic engine room, had its share of misery on Thursday as the jobless total soared from 2.3 million in March to 2.6 million in April.