Eurozone growth soars by record 12.7% as IMF cuts growth predictions for UK
The European economy grew by an unexpectedly large 12.7% in the third quarter as companies reopened after severe coronavirus lockdowns,
This may come as The International Monetary Fund (IMF) has said britain's hopes of a v-shaped recovery will face serious headwinds from a second wave of coronavirus, and Brexit
The EU upturn within the July-September quarter – and the worries by what is coming up next – echoed the problem in the US, where reopenings resulted in strong third-quarter recovery but did not dispel fears for the winter season.
The European rebound was the biggest increase since statistics started in 1995. It followed an 11.8% contraction in the second quarter in the 19 European Union states that use the euro currency.
The April-June period was when restrictions on activities and gatherings were most severe throughout the first wave of the pandemic.
Many economists had expected a rebound of around 10%.
The rebound was led by France, with an enormous 18.2%, followed by Spain with 16.7% and Italy with 16.1%.
Oxford Economics
Rosie Colthorpe, European economist at Oxford Economics, asserted “while these strong growth figures are good news, the current reintroduction of strict containment measures over the bloc is likely to push the recovery into reverse”.
European Central Bank head Christine Lagarde said on Thursday that they expected November to be “very negative”, adding: “Most likely our fourth quarter number will be to the down-side. Could it be negative? We do not know at this point over time.”
Manufacturing companies have seen a stronger bounce back than services. Auto makers like Volkswagen and Daimler AG's Mercedes-Benz have seen profits rebound, helped by their contact with China, in which the virus hit earlier but has since mostly been contained.
Businesses that depend on face-to-face interaction, for example restaurants, hotels and airlines, have been devastated and therefore are seeing only a small fraction of the previous business. Rising infections led the German government to order cinemas, bars and restaurants to shut from Monday until November 30.
Ms Lagarde established that the ECB was working on a brand new package of possible stimulus measures to become discussed at the bank's December 10 meeting, and said there is “little doubt” it would be implemented, given deteriorating conditions.
The ECB didn't adjust its stimulus efforts on Thursday. It is already pumping 1.35 trillion euros (lb1.22 trillion) in newly printed money in to the economy through regular bond purchases, a step targeted at keeping affordable credit flowing to businesses.
The jobless rate in the 19 countries which use the euro was steady at 8.3% in September compared with August. The rise in unemployment continues to be held down by government support programmes that pay the majority of workers' salaries if they are put on short hours or no hours rather than being let go.
UK
The International Monetary Fund (IMF) has said the UK's about a v-shaped recovery will face serious headwinds from a second wave of coronavirus, and Brexit and also the economy won't go back to pre-pandemic levels in 2021.
Experts at the body said the first sharp economic rebound was also getting hurt by rising unemployment and stress on corporate balance sheets.
“We are at a time of high uncertainty. We're not projecting a return to pre-crisis levels in 2021,” said Kristalina Georgieva, the IMF's managing director.
“We are very keen to advise everyone to be agile and versatile in policy response as the pandemic continues.”
The IMF now projects the united kingdom economy will contract by 10.4% in 2021 and just grow by 5.7% the coming year, worse than previous expectations.
In June it projected a ten.2% contraction this year and 6.3% development in 2021.
It said that persistent unemployment minimizing productivity growth could keep gdp (GDP) around 3% to 6% below its pre-pandemic trend for that medium term.
The IMF praised the UK “authorities' aggressive policy response – one of the best examples of co-ordinated action globally”, but warned that policy support will need to still see the economy through Covid-19 and help it transition after Brexit.
