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After the end of the first quarter, the statistical offices of the countries publish the preliminary data continuously, that is, we see the economic effects of the coronavirus with increasing precision. First-quarter GDP data shows a big recession in the largest economies in Europe and the United States, but we still don’t see a completely real picture of it.
The coronavirus actually exploded in the developed world in the second half of March, so we will see the exact effects of the complete closure at the end of the second quarter, after June. Then, in most countries, the quarterly decline will certainly be double digits.
Currently, we can expect the third quarter to no longer be as bad as the second, and we can even see growth in the fourth. In any case, the decreases in the first quarter in developed countries continue to be greater than in the first quarter of 2009Although the coronavirus crisis this month was primarily a problem with supply chain disruptions and the loss of Chinese tourists, the artificial shutdown of the economy in Europe and the United States began in the second half of March.
The United States survived the first quarter relatively cheaply
Data from the United States arrived yesterday, showing an annualized decline of the economy of 4.8% in the first quarter. However, it is important to note that this is an annualized quarterly figure, that is, the quarterly change is “only” -1.2%. The decline in the United States may have been less than in Europe because the epidemic broke out in the country later, and because of this, measures were also taken later.
As noted above, in the United States, the deepest impact of the coronavirus crisis will be seen most in the second quarter, and the decline is likely to be in double digits. So the annualized figure of -4.8% isn’t really that horrible, it could just as easily be the US economy. USA The coronavirus is not swimming as much.
There is a big decline in Europe
In Europe, we are already seeing big quarterly / quarterly declines. According to data released today, the European Union economy contracted 3.5% in the first quarter.
The eurozone recession fell by 3.8%. Italy, Spain, Austria and France also reported data today: the latter had the largest decline in the first quarter (-5.8%), making the EU’s second largest economy in recession in technical terms after the fourth quarter of 2019. , Its economy was reduced by 1%. Germany does not publish preliminary data, but statisticians estimate that the decrease in the first quarter could have been around -2.5%.
Compared to the same period last year, the decrease was 4.8% in Italy, 4.1% in Spain, 2.7% in Austria and 3.3% in the euro area. Of course, in the case of Europe, it is also true that the effects of downtime will be felt more in the second quarter, and the extent of the recession will be significant.
Commerzbank notes in a quick comment that there is a lot of uncertainty surrounding the preliminary data, for example, the data at the end of March is limited, and economists estimate that the decline in production could have reached 25% by then.
What to expect in the future?
Sharp declines in the first quarter mainly reflect declining tourism revenues and supply chain disruptions, with the effects of factory closings and store closings in late March showing only limited effects, primarily in preliminary data. April was almost completely limited, and in most Western countries, much of May can only cause a partial reset. As a result, we will have to face a massive decrease of more than double digits in the second quarter.
Estimates for the distant future are completely surrounded by uncertainty. This will largely depend on the evolution of the epidemic situation. If a possible second wave arrives with new restrictions, the third and fourth quarters could bring poor performance, but at best, the rebound could already start in the last quarter of the year.
Cover image: Getty Images
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