Eurozone major economies post weak GDPs, new lockdowns further quash hopes of recovery
New COVID-19 lockdowns, bearish stock markets quash recovery hopes
Published: Oct 30, 2020 06:38 PM

Pedestrians walk in front of the Reichstag building in Berlin, capital of Germany, Oct. 15, 2020.  Photo:Xinhua

The GDPs of major economies in the eurozone surged in the third quarter compared to the previous quarter, but plunged on a yearly basis, which analysts said was expected, and a new round of lockdowns in Europe could further quash hopes in the West for the next quarter until the end of the year. 

The GDP of Germany bounced back 8.2 percent in the third quarter, but dropped 4.2 percent from a year earlier, according to data from the Federal Statistics Office. Italy's third quarter GDP came in at 16.1 percent, but on an annual basis, its economy is still 4.7 percent smaller than a year ago.

France's economy jumped 18.2 percent in the third quarter, while still contracting 4.3 percent from a year earlier. Its second quarter GDP nosedived 13.8 percent on a quarterly basis.

Eurozone GDP growth in the third quarter was very high, but that's based on an extremely low benchmark in the second quarter, and the third quarter's bright numbers do not suggest a recovery, Hu Qimu, a senior fellow at the Sinosteel Economic Research Institute, told the Global Times on Friday, adding that growth for the eurozone will be dismal in the fourth quarter.

"As Europe already showed signs of a second wave of the epidemic, the eurozone this month has begun to gradually restore some epidemic prevention and control measures, and an expiring economic stimulus plan at the end of the third quarter just added insult to injury. Employment or production will be weak, resulting in poor consumption and output data the rest of the year. Growth in the euro area will dismal in the fourth quarter, the same as the US," Hu said.

The US economy shrank by about 3 percent on a yearly basis in the third quarter, and analysts predict that the full-year GDP could also decline amid an uncertain outlook.

Chinese observers believe China, the country that emerged from the pandemic the strongest, will continue to play the role of stabilizer and backbone of global economic development. 

Countries' COVID-19 pandemic prevention and control abilities are facing a severe test especially after the world's major economies began to enter fall. Many heads of state or senior officials in Europe have tested positive for coronavirus, resulting in blockades in many countries, which will influence their economic activities, Jiang Han, a senior researcher of the Pangoal Institution, told the Global Times.

Europe has struggled to shake off COVID-19 and is now facing a new round of shutdowns, as France, Germany and other places announced lockdown measures on Wednesday.

French President Emmanuel Macron announced a new nationwide lockdown starting Friday, saying the country has been "overpowered by a second wave." 

In Germany, Chancellor Angela Merkel announced a four-week shutdown of bars, restaurants and theaters, as the country recorded its highest daily number of new infections since the outbreak at 14,964. "We must act, and now, to avoid an acute national health emergency," she said.

Countries such as Switzerland, Italy, Bulgaria and Greece have closed or otherwise clamped down again on nightspots, and imposed other restrictions such as curfews and mandatory mask-wearing. 

This kind of new round of blockades is likely to have a huge impact on the capital market. The resurgence of the pandemic has brought about countless uncertainties worldwide. The current overall collapse of the capital market reflects pessimism in the future of the market, which will last for some time, Jiang said.

Major European stock indexes opened sharply lower on Friday even with bright GDP numbers, with Germany's DAX down 1.54 percent, Britain's FTSE 100 down 0.81 percent, and the Euro Stoxx 50 down 1.5 percent.

Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, said the situation shows that the world is on a diverging path in its recovery process from the COVID-19 pandemic.

Chen said the new lockdown measures could mean the world economy would fail to achieve the IMF's latest forecast of 5.4 percent growth in 2021.

In its latest world economic outlook, the IMF projected the world economy would plunge by 4.9 percent in 2020 but return to 5.4 percent growth in 2021.

"Europe's economy is not as resilient as China's, as China's super-large internal market ensures the scale of demand in the context of physical and psychological isolation between countries," Chen Duan, an analyst at the China Digital Economy Research Center, told the Global Times.

"The resilience of the Chinese economy has been demonstrated by the economic data in the first three quarters of the year, which is a global standout. In the future, under the digitally intelligent system shaped by new infrastructure, new supply and demand will be seamlessly connected, which will also trigger a new round of industrial growth in China," Chen noted.