7th Dec 2022

EU suffers record drop in GDP

  • Both the EU27 and euro area registered record falls in growth for the first quarter of 2009 says Eurostat. (Photo: European Community)

The European Union suffered a record fall in growth during the first quarter of 2009, with the EU's statistics office, Eurostat, estimating a drop of 2.5 percent of GDP in both the EU27 and the euro area compared to the previous quarter.

The new figures – released on Friday (15 May) - translate into an annual fall of 4.4 percent and 4.6 percent for the EU27 and euro area respectively when compared with the same quarter of 2008.

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Despite the fact that the financial crisis originally started in the United States, the North American country faired much better, registering a fall in growth for the first quarter of 2009 of 1.6 percent, highlighting the extremity of the European position.

Meanwhile, though there may be tentative signs that the global economy may be bottoming out, the employment situation looks set to worsen in the EU this year.

European trade unions are holding rallies across the region over a three-day period (Thursday–Saturday) in protest at the increasing job losses that show no sign of abating.

Marches are set to take place in Brussels, Prague, Berlin, and Madrid, with organisers hoping to mobilise at least 200,000 people.

On Thursday, British Telecom announced it intends to shed another 15,000 jobs as it struggles to deal with the crisis.

Eurostat said euro area inflation remained at 0.6 percent for the month of April, marking no change from the month before.

The European Commission does not predict the economy will suffer from deflation this year, although some individual member states may record months of negative inflation.

The EU executive says these will not be sustained however.

ECB says more rate hikes to come

European Central Bank president Christine Lagarde said more rate hikes will come, but also admitted a recession will not lower inflation — leaving some economist question the logic of the policy.

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