France sinks deeper into recession, with 14% GDP hit in 2Q

  • France sinks deeper into recession, with 14% GDP hit in 2Q

France sinks deeper into recession, with 14% GDP hit in 2Q

Spain plunged into recession in the second quarter after its gross domestic product tumbled by 18.5 percent due to the coronavirus pandemic, official figures showed on Friday. Having endured what was surely a record-shattering slump last quarter, the US economy faces a dim outlook as a resurgent coronavirus intensifies doubts about the likelihood of any sustained recovery the rest of the year.

Many economists note that the economy can't fully recover until the coronavirus is defeated - a point stressed Wednesday at a news conference by US Federal Reserve Chair Jerome Powell.

Many states have imposed restrictions on visitors from the states that have reported high levels of cases, hurting many industries.

Unsurprisingly given the lockdowns and travel restrictions hitting global tourism, there was a almost 46% drop in transportation and a 57% drop in the restaurant and hotel sector. The data also showed drops in consumer investment on single-family housing and transportation equipment, and a drop in business inventory investment from retail companies such as motor vehicle dealers.

While Spain and France both report alarming lows, the United States sees the most significant impact with a staggering annual rate decline of 32.9% in the second quarter of 2020.

The Spanish government sees the economy contracting by 9.2 percent overall in 2020 but the Bank of Spain says that figure could reach 15 percent.

"The hard part of this recovery is set to start about now", Colijn said.

In the first quarter, growth had fallen by 5.2 percent, the Institute of National Statistics said (INE).

"This moment has passed, it is true that after resisting (the virus) came the economic revival, and now we must focus on what the economic recovery means".

Spain suffered a particularly deadly outbreak of the virus, with more than 28,400 people losing their lives.

However, it will benefit considerably from the historic 750-billion-euro rescue plan agreed by the European Union's 27 member states earlier this month under which it will receive 140 billion euros. Yet with the rate of confirmed coronavirus cases having surged in a majority of the states, more businesses being forced to pull back on reopenings, and the Republican Senate proposing to scale back government aid to the unemployed, the economy could worsen in the months ahead.

Unemployment hit 15.3 per cent by the end of June and is expected to reach 19 per cent by the year's end, the government says, although the International Monetary Fund sees it rising to as much as 20.8 per cent.

Adding to the economic gloom was a disappointing jobless claims report, also released Thursday, which showed that initial weekly unemployment filings rose for the second straight week after steadily falling from its March peak of nearly 7 million.