Important Facts For Prelims
Contraction of Eurozone Economy
- 01 Aug 2020
- 2 min read
Why in News
The Gross Domestic Product (GDP) of the Eurozone reduced by 12.1% in the April-June 2020 quarter, compared to the previous quarter.
- The Eurozone consists of 19 members of European Union (EU), which uses the Euro as their official currency. 8 EU members (Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden) do not use the euro.
- The 27-country European Union saw a decline of 11.9% in its economy for the same period.
Key Points
- This is the largest drop on record in the eurozone's economy, as Covid-19 lockdowns shut businesses and hampered consumer spending.
- No country escaped the impact of the pandemic. Spain suffered the region’s heaviest drop at 18.5%.
- European governments are countering the recession with massive stimulus measures. They have stepped in with loans to keep businesses continuing and wage support programmes that pay workers’ salaries.
- The European Union leaders have agreed on a 750 billion euro recovery fund backed by common borrowing to support their economy from 2021.
- The European Central Bank is pumping 1.35 trillion euro in newly printed money into the economy, a step which helps keep borrowing costs low.
- The European Central Bank is an official EU institution and the central bank of the Eurozone countries.
