The European economy is experiencing a setback due to a surge in Coronavirus (COVID-19) infections and pandemic-related restrictions. Even though the economies in these countries had shown recovery.
Reporting from BBC, Monday (3/5/2021), the economies of countries that entered the eurozone or the euro zone shrank 0.6% in the period from January to March. Thus there have been contractions twice since the start of the pandemic. That left the eurozone facing a double-dip recession.
A double-dip recession is a continuous recession that is punctuated by several periods of growth and worsens again before a full recovery.
However, among the national economies that have reported data so far, this pattern is only repeated by Italy. In the case of Italy, its economy is still 6.6% smaller than it was at the end of 2019 before the pandemic. Other countries reported some growth in the last quarter or two.
The French economy did grow in the first three months of this year by 0.4% after a decline in late 2020, although the rebound is described by the national statistics agency to be limited.
In Germany, on the other hand, after experiencing growth in the fourth quarter of 2020, the economy now shrank 1.7% in the first quarter of 2021. There are a number of specific factors that might influence the growth of the German economy.
Pantheon Macroeconomics’ Claus Vistesen said the German economy was stung by a hike in value added tax (VAT) that led to falling spending and construction.
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