Due to the restrictions related to Covid-19, the euro area economy contracted in the fourth quarter after bouncing back in the preceding three months, preliminary flash estimate published by Eurostat showed on Tuesday.
Gross domestic product fell 0.7 percent sequentially, in contrast to a sharp growth of 12.4 percent logged in the third quarter. However, the pace of contraction was less than the economists’ forecast of -1 percent.
On a yearly basis, the economy shrank 5.1 percent, bigger than the 4.3 percent decline seen in the third quarter and economists’ forecast of -5.4 percent.
In the whole year of 2020, the euro area GDP was down 6.8 percent, data showed.
With strict containment measures still necessary to control the virus, and vaccination programmes progressing slowly, activity across the region will remain very subdued for some time, Jack Allen-Reynolds, an economist at Capital Economics, said.
Last month, the International Monetary Fund downgraded Eurozone’s growth forecast for this year to 4.2 percent from 5.2 percent. The single currency economy is forecast to expand 3.6 percent in 2022.
The EU27 GDP dropped 0.5 percent sequentially in the fourth quarter and shrank 4.8 percent from the same period last year.
Among the member states, for which data are available for the fourth quarter, Austria reported the biggest decline of 4.3 percent, followed by a 2 percent fall in Italy and a 1.3 percent drop in France.
Meanwhile, Germany managed to grow 0.1 percent and Spain expanded 0.4 percent in the fourth quarter.
The material has been provided by InstaForex Company – www.instaforex.com