The European economy contracted by a record amount in the second quarter of this year, bringing the region deep into a recession. The plunge in the region's output during the period was worse than the first quarter, with the coronavirus pandemic nearly grinding economic activity to a halt.
For the second quarter of this year, Europe's overall gross domestic production (GDP) shrank by a record 11.9 percent. This was a big jump from the 3.2 percent contraction during the first three months of the year. Compared with the second quarter of last year, output during the period plunged by more than 14.4 percent. Europe outpaced the United States for the quarter in GDP shrinkage, with the U.S. economy contracting by 9.5 percent.
The European countries with the most output declines were those that were heavily hit by the pandemic. France reported the most with a 13.8 percent decline in output, followed by Spain with 18.5 percent and Italy with 12.4 percent. Germany, which is the region's largest economy, suffered the least with a 10.1 percent decline in its GDP. The global demand for its automotive products, particularly in the already rapidly recovering Chinese market, managed to offset the pandemic's economic effects on the country for the quarter.
According to recent data, Europe's economy is slowly recovering at a relatively steady pace. However, another wave of the coronavirus could put that trend in reverse. German health authorities had warned that the recent spike in new coronavirus cases could be an indication of another wave of cases.
In France, new coronavirus cases have started to increase, nearing the same levels that were recorded back in May. Heavily hit nations during the start of the outbreak, including Italy and Spain, have also started to report an increase in new confirmed cases.
European health officials have started to re-impose quarantine measures for travelers to at least mitigate the further spread of the disease. The re-imposition of the measures has once again negatively affected the region's tourism industry, further placing pressure on the economy.
The latest economic forecast for the European Union has pegged its overall GPD decline for 2020 at around 8.3 percent. The region is expected to gradually recover in the second half of the year, but a re-emergence of the pandemic could hamper its expected recovery rate.
Last month, EU leaders agreed to establish an unprecedented $888 billion recovery fund to aid heavily affected member countries. The trading bloc plans to distribute around half of the funds to heavily hit EU nations, with the rest of the funds to be provided as emergency loans.
