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Europe’s Big Economies Brace for Sharpest Drop Since World War II Europe’s Big Economies Brace for Sharpest Drop Since World War II
(2 months later)
PARIS — Cavernous factories devoid of workers. Cranes frozen in midair over construction sites. Millions of people confined to their homes, spending a fraction of what they used to before the coronavirus hit.PARIS — Cavernous factories devoid of workers. Cranes frozen in midair over construction sites. Millions of people confined to their homes, spending a fraction of what they used to before the coronavirus hit.
Europe’s pandemic-induced lockdowns were widely expected to throw the continent into a deep recession. On Wednesday, Germany and France, the largest economies, showed just how bad it’s about to get, warning that they were headed toward their sharpest downturns since World War II.Europe’s pandemic-induced lockdowns were widely expected to throw the continent into a deep recession. On Wednesday, Germany and France, the largest economies, showed just how bad it’s about to get, warning that they were headed toward their sharpest downturns since World War II.
France officially slid into a recession after suffering one of the worst quarterly contractions in more than 50 years. Growth tumbled an estimated 6 percent from January to April, from the fourth quarter, when the economy shrank slightly because of nationwide strikes, the central bank said. For every two weeks the population remains under confinement, the economy shrinks by at least 1.5 percent, it added.France officially slid into a recession after suffering one of the worst quarterly contractions in more than 50 years. Growth tumbled an estimated 6 percent from January to April, from the fourth quarter, when the economy shrank slightly because of nationwide strikes, the central bank said. For every two weeks the population remains under confinement, the economy shrinks by at least 1.5 percent, it added.
And Germany is sliding toward its deepest recession on record, with growth expected to plunge almost 10 percent from April through June, five leading economic institutes said Tuesday.And Germany is sliding toward its deepest recession on record, with growth expected to plunge almost 10 percent from April through June, five leading economic institutes said Tuesday.
Together, the reports underscored how quickly the situation is snowballing, putting pressure on governments as they scramble to calculate timetables for reopening their economies and weigh billions more in fiscal support to blunt the damage — beyond trillions already pledged in recent weeks.Together, the reports underscored how quickly the situation is snowballing, putting pressure on governments as they scramble to calculate timetables for reopening their economies and weigh billions more in fiscal support to blunt the damage — beyond trillions already pledged in recent weeks.
“The worst growth that France has seen since 1945 was after the great financial crisis of 2008,” the French finance minister, Bruno Le Maire, told the Senate earlier this week. “We will probably go far beyond that.” President Emmanuel Macron was expected to announce in a televised address Thursday night that France would remain under lockdown beyond an April 15 deadline.“The worst growth that France has seen since 1945 was after the great financial crisis of 2008,” the French finance minister, Bruno Le Maire, told the Senate earlier this week. “We will probably go far beyond that.” President Emmanuel Macron was expected to announce in a televised address Thursday night that France would remain under lockdown beyond an April 15 deadline.
In Italy, where a lockdown has been in place for more than a month as the country logs one of Europe’s highest death tolls from the virus, the economy will shrink 9.6 percent in the second quarter, according to forecasts by economists at the Dutch bank ING. Spain, one of the hardest-hit countries, will see its economy decline by 8.9 percent in the same period, ING said.In Italy, where a lockdown has been in place for more than a month as the country logs one of Europe’s highest death tolls from the virus, the economy will shrink 9.6 percent in the second quarter, according to forecasts by economists at the Dutch bank ING. Spain, one of the hardest-hit countries, will see its economy decline by 8.9 percent in the same period, ING said.
Countries are trying to balance public health with concerns that a prolonged, deep recession may prove more costly than keeping their economies frozen to stem the spread of the virus. Economists expect countries to rebound slowly whenever their shutdowns end. Austria and Denmark are already planning exit strategies to reopen businesses and lift quarantines in small waves.Countries are trying to balance public health with concerns that a prolonged, deep recession may prove more costly than keeping their economies frozen to stem the spread of the virus. Economists expect countries to rebound slowly whenever their shutdowns end. Austria and Denmark are already planning exit strategies to reopen businesses and lift quarantines in small waves.
Yet if Germany, the biggest economy, is a marker, any rebound later this year will not be enough to compensate for a dismal first half. For the full year, the German economy will have shrunk 4.2 percent, the German institutes predicted.Yet if Germany, the biggest economy, is a marker, any rebound later this year will not be enough to compensate for a dismal first half. For the full year, the German economy will have shrunk 4.2 percent, the German institutes predicted.
In the eurozone, the group of 19 European Union nations that share the same currency, analysts expect a recession and a contraction of around 13 percent this year. By contrast, in 2009, the worst financial crisis year for the bloc, the economy shrank 4.5 percent.In the eurozone, the group of 19 European Union nations that share the same currency, analysts expect a recession and a contraction of around 13 percent this year. By contrast, in 2009, the worst financial crisis year for the bloc, the economy shrank 4.5 percent.
The economic damage from the coronavirus has been faster, deeper and spread across nearly every economic sector. With nonessential workers ordered to stay indoors, construction activity in France plunged by 75 percent, while industrial activity shrank by half during the first quarter.The economic damage from the coronavirus has been faster, deeper and spread across nearly every economic sector. With nonessential workers ordered to stay indoors, construction activity in France plunged by 75 percent, while industrial activity shrank by half during the first quarter.
French restaurants, hotels, transportation and wholesalers saw business slump by two-thirds, exacerbated by a sharp drop in tourism. With people confined to their homes, consumer spending dropped by a third in the first quarter, while the use of credit and debit cards, a measure of consumer activity, sank by half after France’s quarantine was put in place a month ago.French restaurants, hotels, transportation and wholesalers saw business slump by two-thirds, exacerbated by a sharp drop in tourism. With people confined to their homes, consumer spending dropped by a third in the first quarter, while the use of credit and debit cards, a measure of consumer activity, sank by half after France’s quarantine was put in place a month ago.
The scale of the shock is similar across Europe, according to a report by the Organization for Economic Cooperation and Development released Wednesday. A composite of leading indicators that shows turns in economic cycles fell to the lowest on record, reflecting the economic impact of the lockdowns.The scale of the shock is similar across Europe, according to a report by the Organization for Economic Cooperation and Development released Wednesday. A composite of leading indicators that shows turns in economic cycles fell to the lowest on record, reflecting the economic impact of the lockdowns.
In Germany, joblessness will rise, the German institutes said, but the increase will be relatively modest because of a so-called short-work program that allows companies to furlough workers or reduce their hours rather than letting them go. The government pays about two-thirds of the lost wages.In Germany, joblessness will rise, the German institutes said, but the increase will be relatively modest because of a so-called short-work program that allows companies to furlough workers or reduce their hours rather than letting them go. The government pays about two-thirds of the lost wages.
One in four workers has been put on paid furlough in France, part of a support program worth 45 billion euros that the government has unleashed to try to prevent mass joblessness and the widespread collapse of the small and medium-size businesses that make up the backbone of the economy.One in four workers has been put on paid furlough in France, part of a support program worth 45 billion euros that the government has unleashed to try to prevent mass joblessness and the widespread collapse of the small and medium-size businesses that make up the backbone of the economy.
Germany had a budget surplus before the crisis began and can afford to support businesses with cheap loans and other aid during nationwide restrictions that have forced most nonessential businesses to close.Germany had a budget surplus before the crisis began and can afford to support businesses with cheap loans and other aid during nationwide restrictions that have forced most nonessential businesses to close.
“Germany is in a good position to cope with the economic slump,” Timo Wollmershäuser, head of forecasts at the ifo Institute in Munich, said in a statement. Ifo was one of the five institutes preparing the forecasts for the government.“Germany is in a good position to cope with the economic slump,” Timo Wollmershäuser, head of forecasts at the ifo Institute in Munich, said in a statement. Ifo was one of the five institutes preparing the forecasts for the government.
But other European governments are not so flush. Italy and Spain, both hard hit by the virus, will struggle to provide financial support to people and businesses. They and virtually all European countries are also likely to suffer severe economic slowdowns.But other European governments are not so flush. Italy and Spain, both hard hit by the virus, will struggle to provide financial support to people and businesses. They and virtually all European countries are also likely to suffer severe economic slowdowns.
Updated June 5, 2020
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
A growing number of officials and analysts believe the European Union needs an enormous financial response on a scale that will confront the calamity. Short of that, they warn, the bloc risks a larger financial, economic and potentially social disaster.A growing number of officials and analysts believe the European Union needs an enormous financial response on a scale that will confront the calamity. Short of that, they warn, the bloc risks a larger financial, economic and potentially social disaster.
But European finance ministers ended a marathon overnight teleconference Wednesday without reaching an agreement on measures to counter the economic effects of the pandemic, including proposals to aid financially weak countries.But European finance ministers ended a marathon overnight teleconference Wednesday without reaching an agreement on measures to counter the economic effects of the pandemic, including proposals to aid financially weak countries.
The measures, which would be on top of policies adopted by individual countries to aid their own economies, consist of a three-part package worth about a half-trillion euros, including 240 billion euros in emergency loans from the eurozone’s standing bailout fund, credit guarantees from the European Investment Bank to keep companies from collapsing and support for short-work schemes that help companies avoid layoffs.The measures, which would be on top of policies adopted by individual countries to aid their own economies, consist of a three-part package worth about a half-trillion euros, including 240 billion euros in emergency loans from the eurozone’s standing bailout fund, credit guarantees from the European Investment Bank to keep companies from collapsing and support for short-work schemes that help companies avoid layoffs.
Germany, the Netherlands and some other European Union countries are insisting that aid come with restrictions on government spending and other conditions that are politically unacceptable in Italy and Spain, where residents object to northern countries telling them what to do.Germany, the Netherlands and some other European Union countries are insisting that aid come with restrictions on government spending and other conditions that are politically unacceptable in Italy and Spain, where residents object to northern countries telling them what to do.
Liz Alderman reported from Paris, and Jack Ewing from Frankfurt.Liz Alderman reported from Paris, and Jack Ewing from Frankfurt.