Has the economic suffering in Europe really suffered? For the first time since the start of the second wave of the corona pandemic, the European economy is growing again. Even slightly harder than the US and Chinese economies.
Compared to the first quarter of this year Europe’s economy grew 2.0 percent in the past three months (the eurozone grew 1.9 percent). Eurostat, the European statistical office, announced this on Friday. A day earlier it turned out that the US economy had grown by 1.6 percent in the second quarter of 2021The Chinese economy grew by 1.3 percent in the second quarter.
In this way, Europe is climbing out of the recession, having experienced two consecutive quarters of contraction after a rebound in the previous summer. But where the GDP in the US and China is already above the level before the corona pandemic, the European economy is still 3 percent smaller than before the corona crisis.
If growth is compared to the same quarter a year earlier – the measure that NRC usually applies – then growth for Europe is even 13.7 percent (13.2 percent for the eurozone). The second quarter of last year were the months when all European countries went into full lockdown and the economy came to a standstill. This year was precisely the quarter when vaccinations gained momentum in many countries and societies slowly reopened. Shops and catering establishments were allowed to open, which has boosted consumption again.
In Germany, economic growth was 1.5 percent lower than economists expected
The recovery of the European economies – which showed a contraction of 0.3 percent in the first quarter – is slightly faster than economists expected, according to a poll by the Reuters news agency. In Germany (+1.5 percent) and France (+0.9 percent) growth was lower than the European average, Italy (+2.7 percent) and Spain (+2.9) showed higher growth than expected by economists. The Portuguese economy grew by 4.9 percent due to the revival of tourism. German growth is said to be disappointing, because German industry is more affected by the worldwide shortages of semiconductors, among other things. The Dutch figures are not made public by Eurostat, Statistics Netherlands publishes them on 17 August.
Growth is accompanied by rising inflation, according to other figures published by Eurostat on Friday. At 2.2 percent, inflation in July exceeded the European Central Bank’s target, after inflation was just below that target at 1.9 percent in June.
Rising energy prices, mainly due to higher oil prices, are to blame for rising inflation, as are supply chain congestion such as the wrecking of the container ship Ever Given in the Suez Canal.
Unemployment in the eurozone fell by 425,000 people to 12.5 million, 7.7 percent of the labor force. Economists think that despite the shaky corona situation due to the Delta variant, the European economy will also grow by 2 percent in the third quarter. In a commentary to Reuters, ING economist Bert Colijn compares the European economy to a diesel: “It takes a while for it to get going, but don’t underestimate it once it has picked up speed.”