Italy set back by years: Spain's economy hit even harder

The scale of the corona pandemic for European economies is becoming increasingly clear. Of the big four, everyone has to accept double-digit declines. The recovery will take years.

The number of countries with dramatic economic downturns is growing in Europe. With France, Italy and Spain, the numbers two to four on the list of the largest economies in Europe also presented deep red numbers. The south-west of the continent was hit particularly hard. The corona crisis plunged Spain into the deepest recession in its history. The gross domestic product (GDP) fell in spring in the quarterly view by 18.5 percent, according to the National Statistics Office. In comparison to the previous year there was even a decrease of 22.1 percent. France and Italy also reported double-digit losses, but things weren't as bad for both of them as feared. The three countries are most severely affected by the pandemic in Europe, each complaining of tens of thousands of deaths.

Paris has to accept a historic slump of 13.8 percent in the second quarter. This was announced by the French statistical office Insee. In June, however, the statisticians had estimated the minus at 17 percent.

(Photo: picture alliance / dpa)

In Spain the economic engine had been running smoothly for years before the pandemic broke out. But the exit and contact restrictions to curb virus spread brought the economy to its knees. The very important tourism sector in particular is still suffering from the consequences of the pandemic. In the wake of the virus crisis, unemployment in Spain, which is already high, has risen massively. A million jobs were lost between April and June – more than ever in a quarter. According to Prime Minister Pedro Sánchez, Madrid can count on 209 billion euros from the Corona aid package recently launched in Brussels – of which 81 billion euros are grants that do not have to be repaid.

In Italy The slump between April and the end of June was 12.4 percent on the previous quarter, according to the statistics office Istat in Rome. Even if the authority spoke of an "unprecedented economic downturn", many experts' forecasts turned out to be too pessimistic. "The already poor growth of the past few years was destroyed in one fell swoop in the first half of 2020," said VP Bank chief economist Thomas Gitzel.

According to Istat, the Italian economy got under control in all areas. Italy's GDP fell by 17.3 percent in the second quarter compared to the previous year. The chronically slow-growing country had been caught cold in the spring by the virus pandemic, which was spreading rapidly, particularly in the economically strong north of Italy, and had a negative impact on the health system and beyond in many places.

The government in Rome ordered strict safeguards that paralyzed large parts of the economy in the spring and continue to do so today. The tourism sector also continues to suffer. In order to get back on its feet economically, Italy can also expect a transfer of more than 200 billion euros from Brussels.

In response to the crisis, Conte launched an economic program that he called "the mother of all reforms". In this way, bureaucracy should be reduced and investments made easier. In addition, 75 billion euros are to be made available for aid to companies and private households. Another economic stimulus package worth EUR 25 billion is to be put together in early August.

Europe's largest economy Germany had reported a 10.1 percent drop in GDP the day before. Portugal reported a minus of 14.1 percent. The decline in GDP was comparatively mild Lithuania with minus 5.1 percent and in Latvia with minus 7.5 percent. The Euro zone showed a decline of 12.1 percent.

In the largest economy in the world, the United States, according to the statistics agency, GDP fell by 9.5 percent from the same quarter in the previous year from April to June. Extrapolated to the year, as is customary in the USA, the slump was just under 33 percent.