The GDP of the Eurozone grew 12.7% in that period. America also grew. But the second wave of Covid could cause a new relapse.
Some economists call it “The bounce of the dead cat” but the simile of the ball is less violent. If you drop a ball from the fifth floor of a building, when it hits the ground will bouncebut it will not return to the place from which it started. This effect has been experienced in the third quarter of the year by the European and US economies.
The GDP of the Eurozone grew in the third quarter, according to data published this Friday by Eurostat, the Statistics Office of the European Commission, a 12,7%. In the whole of the European Union at 27 this growth was 12.1%.
That strong bounce of the Eurozone does not dilute all the fall at the end of the first quarter and the second quarter that caused the lockdowns to stop the spread of the coronavirus during the first wave. Thus, the product of the Eurozone is currently 4.3% lower than the same period last year. In the second quarter the Eurozone had fallen by 11.8%.
Europe is far from emerging from the crisis. The first forecasts that are becoming known, such as that of the German insurer ‘Allianz’, show that in the fourth quarter the Eurozone will fall 1%, mainly due to the uncertainty before the second wave of the virus in Europe, which is days to collapse hospitals and that, unlike the first, seems to affect the 27 countries of the bloc, but especially Belgium, the Czech Republic, Luxembourg, the Netherlands, Slovenia, France, Spain and Slovakia. Italy and Poland are on track to join that group in the coming days.
The new round of lockdowns, which began in Ireland last week, continues in France and this Friday could reach Belgium, could sink again the European GDP, so the final fall of this 2020 would be very close to 10%.
The European Central Bank announced on Thursday that in December, depending on the evolution of the economy, it could take new measures after having spent 1.5 trillion euros on purchases of public and private debt so far this year. It thus manages to keep country risk at historically low rates and helps to finance the debt of the states that share the euro.
The rebound of some countries Is superior the one analysts were waiting for. France jumped 18.2%, Spain 16.7%, Italy 16.1% and Germany, which had fallen less in the second quarter, did 8.2%. Those who sank the most from March to June are those with more force they grew starting in July.
European fear is now in the second wave and to measurements that governments are taking in the face of the exponential increase in the number of new infections and its correlation in the form of saturation of health systems. A country like Belgium, which has, in proportion to its population, the largest healthcare system in Europe after the German and Austrian ones, calculates that it has 10 days until intensive care units overflow and critically ill patients crowd the corridors of hospitals.
The European Commission on Friday asked governments to tighten restrictions regardless of the economic impact because the block is heading for a health disaster. Brussels hopes to publish its winter economic forecasts next week, which will give a general picture of what the European economies can expect in 2021 and 2022.
These forecasts will be, more than ever, a practically science fiction exercise because today nobody knows what the new lockdowns will be like, how long they will last and if there will be a third wave later in 2021.
Brussels does not squeeze the capitals. The European Commissioner for the Economy, Paolo Gentiloni, sent a letter to governments at the beginning of October to announce that the deficit and debt control regulations will continue to be suspended in 2021. Within a year, depending on the economic situation, it will be seen whether to apply or if, as requested by the French government, they are reformed.
The American economy also bounced. Pushed by a sharp rise in internal consumption, the GDP of the United States grew 7.4% from June to September after having fallen 9% from April to June.
As in Europe, the US economy has not yet recovered its pre-crisis level and the virulence of the pandemic generates an uncertainty that will slow down the economy again in this fourth quarter. It will depend, as in Europe, on the need to apply confinements or other types of restrictions that have a significant economic impact.
The US GDP is 2.9% below the same period of 2019.
The business cycle in Latin America is late because the lockdowns of the first wave either did not end yet or ended much later than in Europe and the United States. But there are leading indicators that can give signals.
A cable from the EFE agency this Thursday explained that the Brazilian economy created more than 300,000 jobs formal jobs in September, 86% more than in September 2019 and the best September in 30 years for employment in Brazil. In presenting the data, Economy Minister Paulo Guedes said that they confirmed “the recovery of the Brazilian economy in the form of a V”.