Coronavirus plunges Europe’s leading economies into historic recessions

France and Spain both report double-digit drops in second quarter

Spain’s GDP declined 18.5 per cent, according to preliminary estimates by the National Statistics Institute. Photograph: AFP via Getty

Spain’s GDP declined 18.5 per cent, according to preliminary estimates by the National Statistics Institute. Photograph: AFP via Getty

 

The coronavirus pandemic has plunged Europe’s leading economies into historic recessions, figures published on Friday showed.

France and Spain both reported double-digit quarter-on-quarter falls in economic output in the three months to June.

The figures came after both the US and Germany on Thursday reported a loss of about a tenth of their gross domestic product in the second quarter.

Spain’s economy was worst hit, with its GDP declining 18.5 per cent, according to preliminary estimates by the National Statistics Institute.

The fall was worse than analysts had expected and followed a contraction of 5.2 per cent in the first quarter, wiping out seven years of growth since the country’s last recession and leaving output at levels last seen in 2002.

France suffered its largest contraction in output since the second world war. Its GDP was down 13.8 per cent quarter on quarter in the three months to June, although the fall was slightly smaller than analysts anticipated.

This marked the country’s third consecutive quarter of contraction, according to the official statistics agency Insee.

The decline was driven by a 25.5 per cent decline in exports and a 20 per cent drop in government investment. Insee also revised its figure for France’s first-quarter contraction down by 0.6 percentage points, to a contraction of 5.9 per cent.

Spanish fragility

The Spanish figures in particular have fuelled economists’ fears for one of Europe’s more fragile economies.

“It’s the kind of drop one would see in a war,” said José Ignacio Conde Ruiz, a professor of economics at Madrid’s Complutense University. “The only sector that grew was agriculture.”

Spain’s recovery is already under threat from a steep rise in new coronavirus infections that has led other countries to tighten their travel advice, threatening the prospects for its strategically important tourism sector. Tourism makes up about a seventh of Spain’s GDP. – Copyright The Financial Times Limited 2020