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US and Western economies posted historic slumps in Q2

The scale of economic devastation from the pandemic was laid bare on Thursday as Western economies recorded historic slumps, just as resurgent caseloads forced many countries into agonizing new trade-offs between health and financial stability.

COVID-19 has killed more than 668,000 people and is forcing governments into a persistent balancing act between saving lives and preventing economic devastation.   

Nowhere is that challenge more evident than the world’s hardest-hit nation--also the world’s biggest economy--with the United States posting a second-quarter loss of 9.5 percent compared with the same period a year ago, the worst figure on record.   

If that trajectory carried through the entire year, its economy would collapse by nearly a third (32.9 percent), the data showed.

The 32.9-percent GDP contraction, though slightly better than expected, was the worst experienced by the world’s largest economy since at least 1947 and underscored the severity of the rapidly unfolding crisis, which has already destroyed tens of millions of jobs.      

Historic contractions were additionally recorded in Germany (10.1 percent), Belgium (12.2 percent), Austria (10.7 percent) and Mexico (17 percent).   

France’s economy contracted by a record 13.8 percent in the second quarter under the impact of coronavirus lockdowns, the national statistics institute INSEE said Friday.

The seasonally-adjusted quarter-on-quarter drop in gross domestic product (GDP) was better than forecast but worse than the performance of most of its eurozone peers.

“GDP’s negative developments in first half of 2020 is linked to the shut-down of ‘non-essential’ activities in the context of the implementation of the lockdown between mid-March and the beginning of May,” INSEE said in a statement.

Spain plunged into recession in the second quarter after its gross domestic product tumbled by 18.5 percent due to the coronavirus pandemic, official figures showed on Friday.    

In the first quarter, growth had fallen by 5.2 percent, the Institute of National Statistics said (INE).    A recession is commonly defined as two consecutive quarters of a contraction in GDP.

The first of estimate by INE is broadly in line with the forecast by the Bank of Spain which had seen a contraction in the economy of between 16 and 22 percent for the period between April to June at the height of the lockdown when all non-essential activities were halted. AFP  

The German economy shrank by a record 10.1 percent in the second quarter as coronavirus lockdowns took their toll, official data showed Thursday, but experts say a recovery is already under way.

Federal statistics agency Destatis called the quarter-on-quarter decline in gross domestic product “historic” and far bigger than any slump seen during the 2008-2009 financial crisis.

Economy Minister Peter Altmaier had warned earlier this year that the pandemic would push Europe’s top economy into “the worst recession” in its postwar history, ending a decade of growth.

Topics: COVID-19 , Peter Altmaier , COVID-19 , gross domestic product , Institute of National Statistics
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