BIMCO’s SNOW: Europe’s economy retracted 4.8% in the fourth quarter of 2020
The European economy retracted 4.8% in the fourth quarter of 2020, as a rebound in COVID-19 cases put an end to the recovery that had started to take shape in the previous quarter. The third quarter of 2020 fell 4.2% from the same quarter in 2019. With a further drop in Q4, the economy took another step back on its path to returning to pre-pandemic levels. The eurozone economy fared even worse with a 5.1% fall compared with the fourth quarter of 2019.
The ups and downs of the year
The renewed lockdowns and containment measures meant that economic activity fell by 0.5% between the third and fourth quarter of 2020, after 11.5% growth between Q2 and Q3 failed to bring Q3 economic activity back to 2019 levels.
The new lockdowns had a particularly hard impact on retail sales as many shops were once again forced to close, stopping the strong recovery in retail sales over the summer months in its tracks. In Germany for example, following year-on-year growth of 9.1% in November, sales in December fell to -0.1% compared to 2019. In France, the fall came in November when retail sales dropped from +3.9% in October to -12.7% in November compared to the same month in 2019.
In contrast to retail sales, which in many European economies initially bounced back quickly after lockdowns ended, manufacturing on the continent has been slower to return, and although it remains down year on, it was less affected by this second round of lockdowns. In November, manufacturing was down 0.5% compared to 2019, its strongest performance of the year.
“The stop and start of the European economy, and many other economies globally, this year has proven difficult to manage, as the unpredictability of the lockdowns made planning difficult.
An obvious example of this are the recent logistical challenges in container shipping, as retailers rushed to keep up with the sudden spike in demand when shops re-opened, sending imports up, while exports stayed subdued because manufacturing activity has taken much longer to recover in Europe,” says Peter Sand, BIMCO’s Chief Shipping Analyst.
“As the situation continues to develop, ship owners and operators will have to be on their toes to adapt to the rapidly changing situation.”
Source: BIMCO, Peter Sand, BIMCO’s Chief Shipping Analyst