Eurozone GDP surges at fastest rate since 1995

According to a new publication by Eurostat, seasonally adjusted gross domestic product increased by 12.5% in the euro area and by 11.5% in the EU in the third quarter of 2020, when compared to the previous quarter.

Eurozone employment and GDP experienced its sharpest increase since records began this summer, rebounding from a Covid-19-induced contraction earlier in the year.

According to a new publication by Eurostat, seasonally adjusted gross domestic product (GDP) increased by 12.5% in the euro area and by 11.5% in the EU in the third quarter of 2020, when compared to the previous quarter.

Meanwhile, the number of employed persons increased by 1% in the euro area and by 0.9% in the EU during the last quarter, compared to the three months prior.

The statistical office of the EU said these were by far the sharpest increases observed since the agency began collecting data in 1995.

However, compared with the same three months of the previous year, seasonally adjusted GDP decreased by 4.3% in the euro area and by 4.2% in the EU during the months of July, August, and September, which represents a partial recovery after declines of 14.7% and 13.9%, respectively, in the previous quarter.

Eurostat said the rebound in the third quarter was partially driven by a recovery in consumer spending, with household consumption positively contributing to GDP growth in both the euro area and the EU (up 7.3% and 6.9%, respectively). 

The statistics agency also said contributions from the external balance and government final expenditure were positive in both zones, while the contribution of changes in inventories was slightly negative in both zones.

France (18.7%), Spain (16.7%), and Italy (15.9%) recorded the sharpest increases in GDP in the third quarter, following record contractions in quarter two. 

Greece (2.3%), Estonia and Finland (3.3%), and Lithuania (3.8%) had the lowest increases of GDP but, excluding Greece, these countries also had less pronounced declines during the second quarter.

Ireland experienced a growth of 11.1% during the third quarter of this year, slightly below the bloc's average.

Growth in employment levels following the easing of Covid-19 restrictions across many member states in the summer months is also reflected in the Eurostat's data. 

Overall, the number of employed persons increased by 1% in the euro area and by 0.9% in the EU in the third quarter of 2020, compared with the previous quarter when employment had decreased by 3% in the euro area and by 2.8% in the EU.

Ireland led the recovery in this area with a 3.3% increase in employment in the third quarter, when compared to Q2.

Spain (3.1%) and Austria (3.0%) were close behind us, while Lithuania and Romania fared the poorest with decreases of 1.9% and 1%, respectively. 

Employment levels are still down when compared to pre-Covid times, with employment in the euro area down 2.2% and employment in the EU 2.1% below the levels recorded in the fourth quarter of 2019. 

The number of hours worked is also down when compared to the final quarter of last year, 4.6% lower in the euro area and 3.6% lower in the EU.