Eurozone Q3 Rebounds 12.7%... 'Double Dip' Concerns Amid COVID-19 Spread (Comprehensive)

Possibility of Q4 Economic Contraction Raised Due to Germany and France Lockdown Measures
September Unemployment Rate Exceeds Market Expectations at 8.3%

[Image source=EPA Yonhap News]

[Asia Economy International Department Reporters, Bu Aeri] The Eurozone economy achieved a record growth rate in the third quarter, successfully rebounding. However, with the resurgence of COVID-19, this upward trend is already considered to have stalled.

Eurostat, the statistical office of the European Union (EU), announced on the 30th (local time) that the Eurozone's GDP for the second quarter recorded a 12.7% increase compared to the previous quarter. The GDP for the second quarter had recorded -11.8%. This figure exceeded market expectations (9.6%) by 3.1 percentage points.

However, there is growing consensus that such a strong rebound is unlikely to continue into the fourth quarter.

The Wall Street Journal (WSJ) reported on the same day, "As COVID-19 cases rise again, European countries are reinstating lockdown measures such as access restrictions," adding, "The economic rebound has already stopped."

Earlier, Germany and France, the major economic powers in Europe, announced that from next week they will restrict access to bars, restaurants, and other venues to curb COVID-19. In Germany, daily confirmed cases are setting new records, while France recently reported over 30,000 new cases per day.

Experts are forecasting that the European economy will experience a double-dip recession (a decline following a rebound). Bert Colijn, an economist at ING Bank, said, "A feared double-dip is expected."

Germany's economic growth rate is projected to be negative in the fourth quarter, and France is also expected to see its economic size shrink by 3-4% this quarter.

With the resurgence of COVID-19 leading Europe back into lockdowns, expectations for economic growth are also diminishing. WSJ reported that the European economy is likely to become the weakest link globally. The Chinese economy has returned to pre-COVID-19 levels, and the U.S. is expected to recover by the end of next year. In contrast, the prevailing view is that the European economy will have to wait until 2023.

Concerns are especially heightened as lockdown measures have been implemented ahead of the large-scale consumption season in the fourth quarter, including Christmas. Medi Septici, who sells bags in Paris, France, said, "November will be a disaster for us."

Meanwhile, Eurostat announced that the unemployment rate in September was 8.3%, slightly exceeding the market expectation of 8.2%.