Economists had expected a 3.5% contraction, as inflation slowed sharply as much economic activity in March came to a halt
30 April 2020 - 12:50
byJan Strupczewski
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
The European Commission building in Brussels amid the Covid-19 crisis. Picture: AFP/ARIS OIKONOMOU
Brussels — The eurozone economy contracted at a record rate and by more than expected in the first three months of the year and inflation slowed sharply as much economic activity in March came to a halt because of the Covid-19 pandemic, data showed on Thursday.
According to a preliminary flash estimate of the EU’s statistics office Eurostat, economic output in the 19 countries sharing the euro in January-March was 3.8% smaller than in the previous three months — the sharpest quarterly decline since the time series started in 1995.
Economists polled by Reuters had expected a 3.5% contraction after a 0.1% quarterly growth in the last three months of 2019.
Year on year, the GDP contraction was 3.3% in the first quarter.
Eurostat also said consumer prices in the eurozone grew 0.3% month on month in April for a 0.4% year-on-year increase, slowing from 0.7% year on year in March.
But the slowdown of inflation was smaller than expected by economists, who, on average, forecast a deceleration to 0.1% year on year in April, according to a Reuters poll.
The biggest drag on the overall index came from energy prices, which dropped 9.6% year on year.
Without the volatile energy and unprocessed food components — what the European Central Bank (ECB) calls core inflation — prices grew 0.7% on the month for a 1.1% year-on-year increase. In March, this measure was an increase of 1.2%.
An even narrower measure of inflation that also excludes alcohol and tobacco prices and is followed by many market economists showed prices going up 0.8% on the month in April and 0.9% year on year, against a 1.0% annual increase in March.
Separately, Eurostat said eurozone unemployment, a lagging indicator that reflects changes in the economy with a delay, ticked up to 7.4% of the workforce in March from 7.3% in February.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Eurozone economy shrinks 3.8% amid Covid-19 crisis
Economists had expected a 3.5% contraction, as inflation slowed sharply as much economic activity in March came to a halt
Brussels — The eurozone economy contracted at a record rate and by more than expected in the first three months of the year and inflation slowed sharply as much economic activity in March came to a halt because of the Covid-19 pandemic, data showed on Thursday.
According to a preliminary flash estimate of the EU’s statistics office Eurostat, economic output in the 19 countries sharing the euro in January-March was 3.8% smaller than in the previous three months — the sharpest quarterly decline since the time series started in 1995.
Economists polled by Reuters had expected a 3.5% contraction after a 0.1% quarterly growth in the last three months of 2019.
Year on year, the GDP contraction was 3.3% in the first quarter.
Eurostat also said consumer prices in the eurozone grew 0.3% month on month in April for a 0.4% year-on-year increase, slowing from 0.7% year on year in March.
But the slowdown of inflation was smaller than expected by economists, who, on average, forecast a deceleration to 0.1% year on year in April, according to a Reuters poll.
The biggest drag on the overall index came from energy prices, which dropped 9.6% year on year.
Without the volatile energy and unprocessed food components — what the European Central Bank (ECB) calls core inflation — prices grew 0.7% on the month for a 1.1% year-on-year increase. In March, this measure was an increase of 1.2%.
An even narrower measure of inflation that also excludes alcohol and tobacco prices and is followed by many market economists showed prices going up 0.8% on the month in April and 0.9% year on year, against a 1.0% annual increase in March.
Separately, Eurostat said eurozone unemployment, a lagging indicator that reflects changes in the economy with a delay, ticked up to 7.4% of the workforce in March from 7.3% in February.
Reuters
World watches as Germany reopens bigger retail stores
Europe’s banks allowed to hold less capital for funds kept at central banks
Swiss forecasts 7% decline in economy in 2020 due to Covid-19
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Lockdowns are being eased in some countries but UK is not yet ready
Slow pace of lending to businesses comes under fire from groups in UK
Germany is not out of the woods yet, despite good Covid-19 figures
Europe’s small-business backbone braces for breaking point
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.