Eurozone GDP in Contraction, But Trade Surplus Increases

Posted Friday, May 15, 2020 by
Skerdian Meta • 1 min read

The Eurozone economy was already in the brink of recession last year, with manufacturing and industrial production contracting for most of the year, following the trade war between US and China. Only services were keeping the major economies of the continent afloat. But, as the coronavirus broke out and everyone got locked in, the situation had to get worse.

In the first estimate of Q1 GDP report for this year, the economy showed a 3.8% contraction, which is where it remained in the second reading. Although, this month the second reading remained unchanged for Q1, but the YoY reading was revised a tick higher. That doesn’t change much and the worst is yet to come in Q2. Below is the second estimate report for Q1 of 2020:

Eurozone Q1 2nd Estimate by Eurostat – 15 April 2020

  • Q1 GDP second estimate -3.8% vs -3.8% prelim
  • GDP YoY -3.2% vs -3.3% prelim
Little change to the initial estimate as we saw a record quarterly contraction in the euro area economy in Q1. But again, just be reminded that Q2 is going to be worse with April expected to represent the bottom of economic activity across the region.

Eurozone March Trade Balance Report by Eurostat – 15 May 2020

  • March trade balance €23.5 billion vs €17.0 billion expected
  • February stood at €25.8 billion; revised to €25.6 billion
  • Non-seasonally adjusted trade balance €28.2 billion
  • February non-seasonally adjusted trade balance €23.0 billion

The trade balance on the other hand is showing a decent increase in March. Exports fell by 8.9% on the month while imports fell by 9.0% on the month to wrap up Q1 as lock-down measures and the impact of the virus outbreak weighed on trade. Again, April is expected to be worse and this will feed into more subdued conditions in Q2 as well.

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