Euro zone plunges into double-dip recession amid third Covid wave and slow vaccine rollout Business News

The euro zone fell into a double-dip recession in the first three months of the year as a third wave of Covid-19 took hold and countries struggled to roll out their vaccination programs.

Countries that use the single European currency saw their economies collectively shrink 0.6% in the first quarter of 2021. This follows a contraction of 0.7% in the last three months of 2020.

In the EU as a whole, gross domestic product (GDP) – a measure of all goods and services produced – fell 0.4 percent in January, February and March from the same three months over a year ago early.

A second consecutive quarter of declining GDP means the EU is again in a technical recession after partially recovering from last year’s slowdown.

Europe’s economic situation contrasts with that of the United States, which on Thursday announced that its GDP had grown 1.6 percent over the same period, an annualized rate of 6.4 percent.

America has vaccinated people faster than Europe, and Joe Biden’s administration has provided a much bigger stimulus package.

The UK has experienced one of the deepest recessions of any developed economy, but has also seen a stronger recovery so far. GDP remained 7.8 percent below its pre-pandemic level in February, according to the latest figures.

Germany, long considered the economic powerhouse of Europe, recorded a 1.7% drop in GDP in the first quarter. Among the 27 EU Member States, only France and Lithuania recorded growth for the year.

Some signs of recovery began to appear in April as European countries ramped up their vaccination programs.

The EU expects 70 percent of its adult population to have been vaccinated by the end of the summer, which will allow restrictions to be eased and trade activity increased.

The countries most dependent on income from tourism, having so far suffered a greater financial impact from the pandemic, are hoping for a boost from the return of the summer holidays.

Pantheon economic analysts said the numbers confirmed a widely expected recession.

Pantheon said reopening businesses would increase GDP by 4%, up from 3.5% previously forecast.

“This number, however, is at the mercy of the pace of the still unpredictable rebound after the reopening,” warned Claus Vistesen, chief economist of the Pantheon’s eurozone.