EU Growth Soars Record 12.7%,Fears Grow10/30 06:14
FRANKFURT, Germany (AP) -- The European economy grew by an unexpectedly
large 12.7% in the third quarter as companies reopened after severe coronavirus
lockdowns, but the rebound is being overshadowed by worries that growing
numbers of infections will cause a new downturn in the final months of the year.
The upturn in the July-September quarter --- and the worries about what's
ahead --- echoed the situation in the United States, where re-openings led to
strong third-quarter recovery but didn't dispel fears for the winter months.
The European rebound, reflected in figures released Friday, was the largest
increase since statistics started being kept in 1995. It followed an 11.8%
contraction in the second quarter in the 19 European Union member countries
that use the euro currency. The April-June period was when restrictions on
activities and gatherings were most severe during the first wave of the
pandemic. Many economists had expected a rebound of around 10%.
The rebound was led by France, with an enormous 18.2% increase, followed by
Spain with 16.7% and Italy with 16.1%.
Rosie Colthorpe, European economist at Oxford Economics, said that "while
these strong growth figures are good news, the recent reintroduction of strict
containment measures across the bloc is likely to push the recovery into
European Central Bank head Christine Lagarde said Thursday she expected
November to be "very negative," adding that "most likely our fourth quarter
number will be to the downside. Will it be negative? We don't know at this
point in time."
Manufacturing companies have seen a stronger bounce back than services.
Automakers like Volkswagen and Daimler AG's Mercedes-Benz have seen sales and
profits rebound, helped by their exposure to China, where the virus hit earlier
but has since mostly been contained.
Meanwhile, businesses that rely on face-to-face interaction, such as
restaurants, hotels and airlines have been devastated and are seeing only a
small fraction of their previous business. Rising infections led the German
government to order theaters, bars and restaurants to close from Monday through
France, starting Friday, re-imposed a nationwide lockdown for the next
month, closing all non-essential business and forbidding all movement beyond 1
kilometer, or just over half a mile, from home except to go to school or for a
few other essential reasons. The government is promising another 15 billion
euros in aid to businesses hit by the lockdown, on top of hundreds of billions
of euros already spent this year on temporary unemployment and other measures.
Transport company FlixMobility said it was temporarily halting its Flixbus
service in Germany, Austria and Switzerland and FlixTrain service in Germany
starting from Tuesday, saying that the government has asked people to limit
travel as much as possible. The company said that FlixBus hoped to resume in
time for the holidays; FlixTrain plans to resume "once the situation around
corona improves in 2021," a company spokeswoman said in an email.
Lagarde indicated that the ECB was working on a new package of possible
stimulus measures to be discussed at the bank's Dec. 10 meeting and said there
was "little doubt" that it would be implemented, given deteriorating
conditions. The ECB did not adjust its stimulus efforts on Thursday; it is
already pumping 1.35 trillion euros ($1.58 trillion) in newly printed money
into the economy through regular bond purchases, a step aimed at keeping
affordable credit flowing to businesses.
The jobless rate in the 19 countries that use the euro was steady at 8.3% in
September compared to August. The rise in unemployment has been held down by
government support programs that pay most of workers' salaries if they are put
on short hours or no hours instead of being laid off.