Against a backdrop of surging coronavirus cases, the Eurozone is reporting a rebounding economy, with a 12.7 percent hike in third-quarter gross domestic product (GDP), according to a Friday (Oct. 30) report by Eurostat, the statistical office of the European Union.
The glimmer of good news follows disappointing results in the second quarter, which saw a decline of 11.8 percent. Economists polled by Reuters had forecast a 9.4 percent quarterly increase.
“A whopping 12.7 percent rebound in GDP in the third quarter is a bittersweet result with new lockdowns just being announced. That makes a double-dip unavoidable,” ING Economist Bert Colijn told Reuters.
The 19 countries making up the eurozone economy are all rebounding from the coronavirus slump at a faster rate than forecasts predicted. The recovery could stall as countries start curtailing activity to stifle a resurgence of the pandemic.
France and Germany are planning to re-introduce lockdowns for November, which could trigger a fourth-quarter slowdown.
European Central Bank Vice President Luis de Guindos told Reuters that he is not expecting any real kind of economic growth through the end of the year.
Italian Economy Minister Roberto Gualtieri said that in order to avoid backpedaling after the third-quarter recovery, the government must make it an “absolute priority” to avoid a national lockdown.
U.S. Commerce Department data on Thursday (Oct. 29) showed a 33.1 surge in third-quarter GDP, the fastest growth rate on record, beating forecasts of a 32 percent increase. The uptick follows a dismal second quarter that posted the worst decline in history, 31 percent.
Customer spending, the main driver of the GDP, got a boost from pandemic assistance by way of stimulus checks and a temporary increase in unemployment benefits. Personal consumption on seasonally adjusted annualized rates hit $14.3 trillion, up from $13 trillion in the second quarter.
Disposable personal income dropped 13.2 percent to $636.7 billion in the third quarter. Comparatively, the second quarter posted a 44.3 percent increase, hitting $1.6 trillion.