The euro area economy re-entered recession in the first quarter, as initially estimated, due to the restrictions imposed to contain the spread of the Covid-19 pandemic.
Gross domestic product contracted 0.6 percent from the fourth quarter, when GDP was down 0.7 percent, flash data from Eurostat revealed on Tuesday. The rate came in line with the estimate published on April 30.
After a record expansion in the third quarter of 2020, GDP had fallen for the second straight time, pushing the economy back into a technical recession.
On a yearly basis, GDP fell 1.8 percent in the first quarter, but slower than the 4.9 percent decrease seen in the fourth quarter. The annual rate also matched the flash estimate.
The continued progress on reducing Covid infections and administering vaccines suggests that the region’s economic recovery is underway, Jack Allen-Reynolds, an economist at Capital Economics, said.
Turning to the labor market, the economist said employment and labor market participation should soon start to recover too, but the rebound in hiring will probably be quite slow.
The number of employed persons decreased 0.3 percent sequentially, in contrast to a 0.4 percent rise in the fourth quarter. On a yearly basis, the decline in employment deepened to 2.1 percent from 1.9 percent.
Another report from Eurostat showed that the trade surplus declined in March due to a fall in exports amid rising imports.
The trade surplus declined to a seasonally adjusted EUR 13 billion in March from EUR 23.1 billion in February. Exports dropped 0.3 percent, while imports were up 5.6 percent.
On an unadjusted basis, the trade surplus decreased to EUR 15.8 billion from EUR 29.9 billion a year ago. Exports advanced 8.9 percent and imports grew sharply by 19.2 percent.
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