Eurozone economy updates
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The French and Spanish economies have emerged from their historic pandemic-driven downturns, expanding faster than expected in the three months to June, according to data released on Friday.
The 0.9 per cent growth in French gross domestic product in the second quarter was above the 0.8 per cent expected by economists polled by Reuters. The national statistics agency also revised up its first-quarter GDP figures to show the economy flatlined, which meant the country narrowly avoided a double-dip recession over the winter months.
Spanish second-quarter GDP rose 2.8 per cent from the previous quarter, outstripping the 2.2 per cent expected by economists. The figure also marked a sharp rebound from Spain’s first-quarter decline of 0.4 per cent.
The data bolster analysts’ hopes that the eurozone is starting to put the disruption of the coronavirus pandemic behind it.
Economists expect the eurozone economy to continue to expand rapidly over the rest of the year, rebounding from its double-dip recession over the winter, despite the spread of the highly infectious Delta coronavirus variant, which is expected to account for 90 per cent of all of Europe’s Covid-19 infections by August.
“Vaccination rates are significant already and they are increasing steadily,” said Jean Pisani-Ferry, a fellow at the Bruegel think-tank in Brussels and at the Peterson Institute for International Economics. “Some renewed restrictions are likely, but I do not think governments will go for lockdowns as long as there is no risk for the hospital system to be overwhelmed.”
Having lagged behind other major economies’ rebound from the pandemic in the past year, the eurozone is expected to start closing the gap with second-quarter growth of between 1.5 per cent and 2 per cent when GDP figures are released later on Friday.
Earlier this week, the US reported second-quarter GDP growth of 1.6 per cent compared with the previous quarter, while China said earlier this month that its economy grew 1.3 per cent in the same period.
China’s economy topped its pre-pandemic output level last year and the US did the same in the second quarter of this year, but the eurozone is only expected to achieve this by the end of this year.
The French economy was boosted by a 1.1 per cent rise in investment and a 0.9 per cent jump in household spending, its national statistics agency said.
But foreign trade made a slightly negative contribution as imports rose faster than exports and France’s GDP remained 3.3 per cent below its pre-pandemic level in the fourth quarter of 2019. The French government has forecast the economy will grow 6 per cent over the course of this year.
After a slow start, vaccinations in the EU have accelerated in recent weeks and on Tuesday the bloc overtook the US in the number of jabs administered per 100 people, which reached 102.6 in the EU against 102.4 in the US, according to Our World in Data.
French president Emmanuel Macron recently prompted a surge in vaccinations by introducing a law to make Covid vaccination compulsory for healthcare workers and to require a “health pass” to enter public places such as restaurants and bars.
Coronavirus infections across Europe hit 200 per 100,000 people in the week to July 25, up from just over 150 a week earlier, according to the European Centre for Disease Prevention and Control. It forecast that the rate could reach 304 within two weeks.