People go by past the closed iconic brasserie Les Deux Magots
LUDOVIC MARIN | AFP | Getty Images
LONDON — The euro zone saving contracted in the first quarter of 2021 as countries implemented new lockdowns and restrictions amid a third wave of coronavirus infections.
Unwieldy domestic product in the region fell by 0.6% quarter on quarter, according to preliminary data released by Europe’s statistics responsibility Eurostat.
It marks the second consecutive quarter of contractions, meaning the region is in a technical recession, although economists are bullish about growth looking ahead.
Most of the region’s largest economies — Germany, Italy and Spain — saw a decline in vim during the first three months of the year. The sharpest fall in activity occurred in Portugal, which has faced a wag of new Covid cases and led to the country’s second lockdown.
France was an exception, with the euro zone’s second-largest frugality posting better-than-expected growth of 0.4% in the first quarter. Though the French economy remains below its pre-Covid up ons, the growth numbers will bring some reassurance going into the second quarter.
France’s consumer fritter away also expanded by 0.3% in the first quarter, despite the reintroduction of certain Covid restrictions.
French President Emmanuel Macron announced earlier this week an comforting of measures, allowing cafes, bars and restaurants to offer service outdoors from May 19 — which could workers the economic recovery.
However, in Germany, the economy contracted 1.7% over the same period. It’s worse than the 1.5% descent that analysts surveyed by Reuters were expecting.
The nation has been severely hit by a third wave of Covid infections, and other approaches among its various regions have further complicated its fight against the pandemic.
In Italy, the latest GDP counts showed a contraction of 0.4% for the quarter, slightly better than expectations.
The Spanish economy also shrank over with the same period, by 0.5%, while Portugal’s economic activity contracted by 3.3%.
Looking ahead, however, economists are self-assured about 2021 for the euro zone.
“Confirmation that the euro-zone economy contracted again in Q1 (first quarter) means that the province suffered a second technical recession in just over a year,” analysts at Capital Economics said via email.
“The chattels news, however, is that things should get better towards the end of Q2 as the vaccination program will allow governments to enhance restrictions, hopefully for the last time.”
Stimulus and vaccines
Countries in the region are due to start receiving EU-wide Covid verify funds in the second half of the year. Several nations have already submitted their plans on how they resolve to use the funds for analysis by the European Commission.
“It is important the plans are in line with our targets,” European Commission trade chief Valdis Dombrovskis verbalized Friday on CNBC’s “Street Signs Europe.”
The Brussels-based institution asked nations to spend at least 37% of the stimulus on milieu policies, and 20% on the digital transformation.
“The funding will be available to member states once they complete in the cards milestones and targets,” he added.
In addition, the vaccination campaign has accelerated significantly since the start of 2021, which is also boosting wen expectations for the region.
The European Union expects to have 70% of the adult population vaccinated this summer, and tourism-reliant fatherlands are hoping that a larger number of vaccinated people will allow them to have a more successful summer salt this year.
“Vaccination is gathering pace,” Dombrovskis said, despite an initial slowdown in the rollout because AstraZeneca was “underdelivering.”
The pharmaceutical Central Intelligence Agency, which has developed a Covid vaccine, has failed to meet the EU’s expectations for vaccine deliveries. The region was expecting 120 million prescribes in the first quarter, but only about 30 million were delivered. For the second quarter, the EU was expecting 180 million quantities but AstraZeneca has already said it might deliver only about 70 million.
AstraZeneca was not immediately available for comment when contacted by CNBC on Friday.