The 19 member-states of the eurozone saw their combined gross domestic product for 2020 plunge 6.8% year-on-year on a dismal fourth quarter that wiped-out the huge economic gains made in the previous quarter despite high COVID-19 cases.
The European Statistical Office (Eurostat) in a preliminary report issued Tuesday said the eurozone, the countries that use the euro currency, grew strongly in the third quarter at 12.4% as low coronavirus infection rates allowed harried governments to partially reopen their economies.
The spread of a more contagious COVID-19 strain first reported in the United Kingdom and the winter weather, however, worsened the festering second coronavirus wave. The surge led Germany and France, the eurozone's largest economies, to reimpose national lockdowns that again hurt growth as they had in the spring.
The lockdowns in both countries and in some other eurozone member-states stunted economic growth in the fourth quarter. Economic growth in the quarter slid 0.7% as a result.
In the fourth quarter, Germany grew 0.1% quarter-on-quarter, but GDP sank 5.0% for the entire year. France saw growth contract by 1.3% in the quarter compared to a record-setting 18.5% expansion in the third quarter. Its economy fell 9.8% year-on-year.
The quarterly and annual numbers, however, were still better than analyst estimates and suggested some businesses had adapted to the demand destroying effects of the lockdowns better than others.
Ahead of the dire economic news, Christine Lagarde, president of the European Central Bank (ECB), insists the eurozone continues to recover from the pandemic.
"The journey seems to be a little bit delayed but should not be derailed," said Lagarde last week.
The bad numbers simply mean economic recovery has been delayed by new lockdowns and uncertainty surrounding the pace of vaccinations and the reduced supply of vaccines from manufacturers.
The unsettled economic situation in the eurozone led the International Monetary Fund (IMF) to lower its growth expectations to 4.2% for 2021, a one percentage point drop from its previous forecast.
The IMF also slashed its 2021 growth forecasts for Germany, France, Italy and Spain, the four largest economies in the eurozone.
In May 2020, the ECB forecast the eurozone might contract anywhere from 5% to 12% in 2020, a forecast that was on target.
The collective GDP of the 19 countries in the eurozone shrank 3.8% in the first quarter, and by a massive 12.1% in the second quarter due to the economic damage inflicted by COVID-19 lockdowns. At the time, Lagarde urged eurozone politicians to cooperate on an ambitious package of spending measures to support economic recovery.
