Gross Domestic Product (GDP) for the European Union (EU) contracted 6.8% in 2020, according to data from Europe’s statistics office.
The region had experienced a growth rate of 12.4% in the third quarter as low infection rates at the time had allowed governments to partially reopen their economies.
However, the COVID-19 pandemic deteriorated in the last three months of 2020, with Germany and France reintroducing national lockdowns. The tightening of the social restrictions weighed on the economic performance again, deepening the economic contraction for the Euro zone.
Data released last week showed that Germany grew 0.1% in the final quarter of 2020. Spain experienced a GDP growth rate of 0.4% in the same period while France contracted by 1.3%.
Nonetheless, the final quarter of last year coincided with news of the first coronavirus vaccine approvals, which renewed optimism that the pandemic could come to an end soon. However, the vaccine rollout has been slow and bumpy, with economists fearing it will delay the much-needed economic recovery.
In addition to the uneven distribution of COVID-19 vaccines, the number of daily cases has also increased so far in 2021 amid the spread of new variants of the virus. Governments throughout Europe have extended or reintroduced lockdowns to contain the spread.
In this context, the International Monetary Fund (IMF) has lowered its growth expectations for the European Union in 2021. The IMF last week cut its growth forecast for the region by one percentage point to 4.2% this year. Germany, France, Italy and Spain — the four largest economies in the Euro zone — all saw their growth expectations slashed for 2021.
In contrast to the European Union, Canada’s economy contracted 5.1% and the U.S. economy shrank 3.5% in 2020.
