Eurozone GDP fell less than expected in the second quarter

According to the report from Eurostat, in the second quarter of 2020, still marked by COVID-19 containment measures in most Member States, seasonally adjusted GDP decreased by 11.8% in the euro area and by 11.4% in the EU compared with the previous quarter. These were by far the sharpest declines observed since the time series started in 1995. Economists had expected a 12.1% decrease in the euro area. In the first quarter of 2020, GDP had decreased by 3.7% in the euro area and by 3.3% in the EU.

Compared with the same quarter of the previous year, seasonally adjusted GDP decreased by 14.7% in the euro area and by 13.9% in the EU in the second quarter of 2020, after -3.2% and -2.7% respectively in the previous quarter. These were also by far the sharpest declines since the time series started in 1995. Economists had expected a 15.0% decrease in the euro area. 

During the second quarter of 2020, household final consumption expenditure decreased by 12.4% in the euro area and by 12.0% in the EU (after -4.5% in the euro area and -4.2% in the EU in the previous quarter). Gross fixed capital formation decreased by 17.0% in the euro area and by 15.4% in the EU (after -5.2% and -4.6% respectively). Exports decreased by 18.8% in both the euro area and the EU (after -3.9% and -3.2% respectively). Imports decreased by 18.0% in the euro area and by 17.8% in the EU (after -3.2% and -2.8% respectively). Household final consumption expenditure had a very strong negative contribution to GDP growth in both the euro area and the EU (-6.6 and -6.3 percentage points – pp, respectively) and the contribution from gross fixed capital formation was also strongly negative in both zones (-3.8 and -3.4 pp respectively). The contributions from the external balance and government final expenditure were also negative in both zones, while the contribution of changes in inventories was slightly positive in the euro area and slightly negative in the EU.