Business & Economy

European economies hit by summer uptick in Covid cases

Frankfurt, Germany, Aug 28 (efe-epa).- German consumer confidence in August took a severe hit after three months on the rise, survey results published on Friday showed, while France reported the sharpest decline in growth in its history, as Europe’s economies continued to reel from the damaging effects of lockdowns imposed to stem the coronavirus pandemic.

GERMANY

The potential second wave of the coronavirus pandemic has severely dampened German consumers’ confidence, according to a survey by Growth from Knowledge.

After hitting an all-time low in May due to widespread lockdowns to contain the spread of Covid-19, consumer confidence had been on the rise for three consecutive months amid hopes of a prompt recovery, GfK said.

But a recent uptick of new infections in August has reversed the trend and undone stimulus measures such as the reduction of value added tax that took effect in July.

“An increase in the number of infections and the fear that coronavirus-related restrictions will be further tightened are creating uncertainty and consequently dampening the mood,” GfK expert Rolf Buerkl said.

“Whether or not this is just a temporary slowdown will depend primarily on what infection rates look like in future and the necessary measures to be put in place by policy makers,” he added.

The survey said that despite the slowdown, German “consumers remain confident that with the help of extensive economic stimulus packages (…), the German economy will be able to recover” from the worst recession since the Second World War.

But GfK warned that this confidence was dependent on the recent rise in infections being slowed or halted and avoiding any further “drastic measures” such as another lockdown.

FRANCE

France’s Gross Domestic Product (GDP) suffered the sharpest quarterly decline in its history, the National Institute of Statistics (INSEE) said.

French GDP fell 13.8 percent in the second quarter, following a 5.9 percent decline in the first quarter.

INSEE said that the negative growth was tied to the slowdown of non-essential activities related to the coronavirus lockdown from mid-March until early May.

The fall is less severe than forecasts had predicted, after INSEE had expected a decline of 17 percent in the second quarter and 5.3 percent in the first.

SWEDEN

Sweden’s GDP also suffered heavy losses in the second quarter of the year, dropping 8.3 percent compared to the first quarter.

Declining exports, which fell by 18.2 percent, and 7.7 percent less household spending, due to the coronavirus crisis both contributed to the biggest drop in GDP since 1980, when Sweden began measuring these indicators.

Unlike most other European countries, Sweden adopted relatively lax measures in trying to contain the pandemic.

While officials issued several recommendations through general public health appeals to protect vulnerable segments of the population and imposed some minor restrictions on the population, Sweden did not go into lockdown, unlike its neighbours and partners in the EU.

Schools and nurseries remained open throughout the spring, when the pandemic was sweeping across the world, while bars and restaurants were allowed to stay open for business, although with some restrictions in place.

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