Eurozone Q3 GDP up nearly 13%, still far from pre-pandemic levels

Author: Jonathan Lopez


LONDON (ICIS)--The eurozone’s GDP rose strongly in the third quarter, up 12.7% quarter on quarter, but the 19-country currency union’s output remains well below year on year, the EU’s statistical agency said on Friday.

The increase was larger than the fall in the second quarter, but GDP had already decreased in the first quarter as the pandemic hit Europe in March and lockdowns started to be implemented.

The pandemic's second wave, hitting Europe hard again, has prompted new restrictions to mobility to slow the spread of coronavirus. These measures could cause a fall in GDP in the fourth quarter, analysts said this week.

In Friday's flash estimate, subject to change as some countries have yet to report national accounts for the third quarter, Eurostat said output in France, Italy, and Spain jumped over 15% during the July-September quarter (see data sets at bottom).

Spain posted in the second quarter the largest fall within the eurozone as it implemented one of the strictest lockdowns to fight off the pandemic.

In the wider EU, GDP rose in the third quarter also more than 12%; the 27-country bloc’s output, however, also remains lower year on year.

“While a rebound was observed for all publishing countries compared to the second quarter, the year on year growth rates were still negative,” said Eurostat.

In fact, despite the jump in output during the third quarter, the unemployment rate rose. Eurostat  published on Friday figures for September showing a year-on-year increase of nearly a percentage point in workers looking for jobs.

The unemployment rate in September in the eurozone stood at 7.5%, up from 6.6% in September 2019.

The rise in unemployment would show how the eurozone's economy is set for a deep downturn which could be protracted by fresh restrictions to fight the pandemic.

Germany and France have announced partial national lockdowns. Spain and Italy have also implemented curfews and other measures to reduce social mobility and potential transmission.

"The recent reintroduction of strict containment measures across the bloc [eurozone] is likely to push the recovery into reverse. Early survey data for Q4 show the outlook was already darkening before the restrictions were introduced," said on Friday analysts at Oxford Economics.

"We now expect the eurozone economy to shrink once again in Q4. If the current restrictions do not control the spread of the virus, governments are likely to tighten or extend containment measures. This means risks to the Q4 outlook lie clearly to the downside."

GDP growth, quarter on quarter

(% change) Q4 2019 Q1 2020 Q2 2020 Q3 2020
Eurozone 0.0 -3.7 -11.8 12.7
EU 0.1 -3.3 -11.4 12.1
Germany 0.0 -1.9 -9.8 8.2
Spain 0.4 -5.2 -17.8 16.7
France -0.2 -5.9 -13.7 18.2
Italy -0.2 -5.5 -13.0 16.1

GDP growth, year on year

(% change) Q4 2019 Q1 2020 Q2 2020 Q3 2020
Eurozone 1.0 -3.3 -14.8 -4.3
EU 1.2 -2.7 -13.9 -3.9
Germany 0.4 -2.1 -11.2 -4.2
Spain 1.7 -4.2 -21.5 -8.7
France 0.7 -5.8 -18.9 -4.3
Italy 0.1 -5.6 -17.9 -4.7