Eurozone Heading into Recession Again as Q4 GDP Comes in Negative
Eurozone GDP for Q4 of 2020 shrank by 0.7%
The global economy fell into a deep recession in Q2 of 2020, during the first wave of lockdowns. In Q3, we saw a strong rebound, but the world economy softened again in Q4, particularly in Europe, where the coronavirus restrictions were reimposed.
Today’s report showed a 0.7% contraction that month, with the Italian GDP for the same period coming in at -2%. Q1 of 2021 is expected to be worse, as lockdowns are once again in place, so we are going to see another recession in Europe. Meanwhile, the EUR/USD continues its slide. It is trading above 1.20 today and chances are that it will break below this level soon.
Eurozone Q4 Advanced GDP
- Q4 advanced GDP QoQ -0.7% vs -0.9% expected
- Prior (Q3) GDP was +12.5%; revised to +12.4%
- Q4 GDP YoY -5.1% vs -5.3% expected
- Prior (Q3) GDP YoY was -4.3%
The initial reading is a little better than the estimates, but this still shows that the economy of the Eurozone shrank in the final quarter of last year, amid tighter virus restrictions. So far in Q1, similar conditions are playing out, which increases the likelihood that a double-dip recession will follow, although the optimism surrounding the coronavirus vaccines is largely overshadowing that for now.
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