The eurozone economy shrank in the last three months of 2020 as European countries closed shops and restaurants and restricted travel to try to contain the coronavirus.
Economic output in the 19 countries that belong to the eurozone fell 0.7 percent in the fourth quarter compared with the previous quarter, according to a preliminary estimate by the European Union’s official statistics agency said.
For the full year, overall output fell 5.1 percent.
Economists expect the economy to shrink again in the first quarter of 2021, leading to a double-dip recession. The bloc’s economy also shrank during the first half of 2020.
The decline capped a roller coaster year for the eurozone economy. In the second quarter, gross domestic product fell 11.7 percent as the pandemic took hold, then rebounded 12.4 percent in the third quarter as lockdowns eased and firms adjusted to the crisis.
The latest data reflects the malaise that has taken hold as European leaders struggle to vaccinate their citizens, a project that has moved more slowly on the continent than in Britain or the United States.
“The short-term prospects for the European economy remain clouded by a challenging health situation in several countries and an underwhelming start of the vaccination rollout,” Nicola Nobile, lead eurozone economist at Oxford Economics, said in a note to clients.
European factories have largely adapted to the pandemic and are operating almost normally, but stores, restaurants and hotels continue to suffer. More than half of Germans who work in hotels or restaurants, about 600,000 people, are on government-subsidized furloughs and effectively unemployed, according to the Ifo Institute in Munich, a research organization.
Growth figures for all the eurozone members are not yet available, but among the countries that have reported so far, Austria, Italy and France suffered declines in output in the quarter while Germany, Spain and most other countries managed modest growth.
Including countries like Poland, Hungary and Sweden that are members of the European Union but not the eurozone, output in the bloc fell 0.5 percent in the October-December period.