After spectacular growth in the third quarter of 2020, after an even more spectacular drop in the second quarter, the European Union has collapsed at the end of 2020 due to the new waves of the coronavirus in the final stretch of the year. This is confirmed by the first approximations of Eurostat, to the statistical office of the EU, published this Tuesday. According to a first estimate of annual growth for 2020 by Eurostat, GDP fell by 6.8% in the euro area and by 6.4% in the EU as a whole.
In the fourth quarter of 2020, seasonally adjusted GDP decreased by 0.7% in the euro area and 0.5% in the EU, compared to the previous quarter, according to Eurostat’s preliminary estimate. These decreases, related to the containment measures of COVID-19, come after a strong rebound in the third quarter of 2020 (+ 12.4% in the euro area and + 11.5% in the EU), and the Steepest decreases since the start of the time series in 1995 observed in the second quarter of 2020 (-11.7% in the euro zone and -11.4% in the EU).
Eurostat warns that “these preliminary GDP estimates are based on data sources that are incomplete and subject to further revision.”
Compared to the same quarter of the previous year, seasonally adjusted GDP fell by 5.1% in the euro area and by 4.8% in the EU as a whole in the fourth quarter of 2020, after -4.3% in the euro area and -4.2% in the EU in the third quarter compared to the same period in 2019.
Among the States with data available for the fourth quarter of 2020, Austria (-4.3%) registered the largest decrease compared to the previous quarter, followed by Italy (-2%) and France (-1.3%), while Lithuania (+ 1.2%), Latvia (+ 1.1%) and Spain (+ 0.4%) registered the largest increases. Annual growth rates remained negative for all countries.
The International Monetary Fund (IMF) lowered last week By 1.3 percentage points, the forecast for an increase in Spanish GDP for 2021, leaving it at 5.9% compared to the 7.2% expected last October. The fall contrasts with the economic performance of the world, where the Fund’s forecasts have been revised upwards by 0.3 percentage points with respect to the previous forecast to achieve growth of 5.5% in that year. However, our country is aligned with the forecasts of the European Union, which loses one percentage point compared to the October forecast and reduces growth in 2021 to 4.2%, according to the update of the “Global Economic Outlook” report that the Fund has made public this Tuesday.
In this review, the multilateral body headed by Kristalina Georgieva reduces the fall in Spanish GDP in 2020 to 11.1% (it remains one of the worst hit economies in the world), compared to the 12.8% it had forecast three months ago , and raises Spanish growth by 0.2 percentage points in 2022, to 4.2%. Except for the United States, the forecast for advanced economies is tenths higher than the IMF had last October, a more positive view of weak growth for Europe in 2021.
Within the euro economies, Spain is not the one that is most affected in this revision of the IMF’s economic forecasts. The multilateral body reduces Italy’s growth by 2.2 percentage points, which will only increase by 3%, while it reduces Germany’s GDP by 0.7% by 2021, placing the rise at 3.5%, and reduces by half a point percentage the outlook for the French economy, which will grow 5.5% this year. Despite the reduction, Spain will be the country that will grow the most in 2021 among the main economies in the euro zone, according to the fund’s forecasts.
However, in the advanced economies as a whole, the evolution of the Eurozone is depressing. The US forecast for 2021 has been revised upwards by two percentage points, with growth of 5.1%, “reflecting the drag from the strong momentum of the second half of 2020 and the additional support of the fiscal package of December 2020 “. Regarding Japan, the forecast increase has been 0.8 percentage points, with a GDP increase to 3.1% by 2021, which according to the Fund is due “to the additional boost of the fiscal measures introduced at the end of 2020” .
The forecast is that China will grow by 8.1% in 2021, practically maintaining the forecasts of October, with India being the emerging economy that will explode this year with a GDP increase of 11.5%, 2.7 percentage points more than in the forecast of the last October, while Russia will see its economy grow by 3%; Brazil, 3.6%; and Mexico, 4.3% in 2021.
Problems for tourism
The IMF advises that “oil exporters and tourism-based economies face particularly difficult prospects, given the expected slow normalization of cross-border activity, the normalization of cross-border travel, and the bleak prospects for cross-border business. oil prices “. A clear warning for Spain where 14% of GDP depends on tourism.
As the main risks to the global economy, the Fund warns that “growth could be weaker if the wave of viruses (including new variants) proves difficult to contain, infections and deaths increase rapidly before vaccines are widely available , and the voluntary distancing or blockades are stronger than expected. ”
The Fund pays special attention to vaccines, which it sees as a clear source of “boosting the confidence of companies and households, which would generate a greater recovery in consumption, investment and employment, and companies would hire and expand their capacity in anticipation of increased demand “, but also warns of the strong economic impact that may mean that” the deployment of vaccines suffers delays, that generalized indecision makes their adoption difficult or that immunity is shorter than expected. ”