Covid-19 plunges world economy into record slump

The coronavirus pandemic has pushed most of the world’s major economies into unprecedented contractions in the second quarter, except for China which escaped a recession.

(NST) – Here are the second quarter changes in gross domestic product (GDP) compared to the previous quarter for the world’s top economies. Unless stated otherwise, the figures are from the national statistics institutes.

Europe’s top economy was hit less hard by the coronavirus than its neighbours, but still saw its GDP fall by 10.1 per cent in the second quarter.

As GDP had already declined by 2 per cent in the first quarter, Germany’s economy met the definition of a recession: two consecutive quarters of contracting GDP. Germany’s previous record for a quarterly GDP drop: 4.7 per cent in the first quarter of 2009.

The eurozone’s number two economy, France, was in a longer and stricter lockdown than its eastern neighbour, and second quarter GDP fell more steeply, by 13.8 per cent, after a drop of 5.9 per cent in the previous three months. Previously, the worst quarterly GDP growth in France happened in 1968 because of a general strike in May of that year.

Italy’s growth was impacted very early on by the coronavirus which hit its richest region, Lombardy, particularly hard. Italian GDP fell by 5.4 per cent in the first quarter and then by 12.4 per cent in the second, pushing the country into recession.

After a 5.2 per cent drop in the first quarter, Spain’s economy contracted a further 18.5 per cent in the second, notably because of a 60 per cent drop in tourism income and a fall by one third in exports.

The eurozone’s overall GDP plunged 12.1 per cent in the three months to June, after 3.6 per cent in the first quarter, making the second quarter downturn “by far” the worst since statistics agency Eurostat started compiling growth data for the area in 1995.

The UK suffered the worst recession in Europe in the first two quarters of the year, also recording the highest number of coronavirus deaths in Europe. GDP fell 20.4 per cent in the second quarter after a 2.2 per cent drop in the first.

The United States, the world’s top economy, suffered a 9.5 per cent slump in the second quarter following a 1.3 per cent drop in the first, according to figures published by the OECD. The US government publishes annualised figures (-32.9 per cent in the second quarter), a method that is not comparable with most other countries.

China, the world’s second-largest economy, may have been where the novel coronavirus originated, but thanks to strict lockdown measures it was able to largely halt the spread of the virus and reopen factories, thus avoiding a recession.

In the second quarter its economy rebounded by 11.5 per cent, having fallen by 10 per cent in the first quarter. Still, growth for this year will be much below what China has become accustomed to for decades.

Japan announced in mid-May it was already in recession when first quarter GDP slid by 0.6 per cent after a 1.9 per cent drop in the final quarter of 2019. The world’s number three economy has yet to publish second quarter GDP figures.