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France and Spain have already revealed the evolution of gross domestic product (GDP) in the first quarter, confirming that covid-19 is having a strong impact on economic activity.
The economies of the two countries suffered chain failures of over 5%, representing the most negative development since the statistical institutes collected the data.
Spain’s GDP contracted 5.2% in the first quarter compared to the previous three months, which according to El País represents the biggest drop since World War II. The largest quarterly decline announced to date by the National Statistics Institute occurred in the financial crisis, when Spain’s GDP sank 2.6% in the first quarter of 2009.
The fall in the first quarter of this year doubled compared to that registered 11 years ago, which shows the great impact of the economic paralysis due to covid-19. This despite the fact that the containment measures affected only part of the month of March, which anticipates an even darker second quarter.
In the first quarter, household consumption fell 7.5%, business investment fell 3.5%, and exports and imports fell 8.4%.
This Thursday Eurostat will announce the GDP of the euro zone in the first quarter, and the figures are also expected to be very negative.
Also today France announced that GDP contracted 5.8% in the first quarter, compared to the previous three months, which according to the Financial Times represents the strongest contraction since the French statistical institute Insee began collecting this data in 1949.
The record contraction reflects the paralysis of the economy due to the spread of coronaviruses, which in March already strongly affected the second largest economy in the euro area.
“The negative evolution of GDP is mainly related to the closure of non-essential activities within the scope of the ‘blocking’ measures adopted in mid-March,” says Insee.
The sharp drop in GDP was led by an “unprecedented” decrease in domestic consumption of 6.1% and a decrease in investment of 11.8%. Exports and imports fell 6%.
The French economy contracted 0.1% in the last quarter of 2019, which is why it is already in a technical recession.
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