Record economic slumps hit Europe in face of resurgent virus

France’s economy contracted by 13.8 per cent in the April-June quarter, mirroring similar devastation in Spain (18.5 per cent), Portugal (14.1 per cent) and Italy (12.4 per cent). — AFP pic
France’s economy contracted by 13.8 per cent in the April-June quarter, mirroring similar devastation in Spain (18.5 per cent), Portugal (14.1 per cent) and Italy (12.4 per cent). — AFP pic

PARIS, Aug 1 — Devastating economic data poured in yesterday as nations counted the cost of efforts to contain the coronavirus pandemic, even as fresh spikes forced countries including Britain to put the brakes on a return to normality.

Six months after the World Health Organisation (WHO) declared a global emergency, the novel coronavirus has infected more than 17 million people and killed nearly 674,000, according to an AFP tally.

As global daily cases approach the 300,000 mark, the impact is being felt in every sphere of life, with elections postponed in Hong Kong — the latest blow to its democracy activists — and the annual Muslim hajj pilgrimage in Saudi Arabia performed with radically reduced numbers.

In a sign of the terrible trade-offs being forced on governments, Britain imposed new lockdowns in several northern counties yesterday, just as Western Europe announced historic economic slumps that would have been nightmare scenarios at the start of the year.

France’s economy contracted by 13.8 per cent in the April-June quarter, mirroring similar devastation in Spain (18.5 per cent), Portugal (14.1 per cent) and Italy (12.4 per cent).

Europe as a whole saw gross domestic product (GDP) fall by 12.1 per cent in the eurozone and by 11.9 per cent across the Union bloc.

“It is a shocking drop, but completely understandable as the economy was shut for a considerable period,” noted Bert Colijn, senior economist at ING Bank.

Meanwhile, in the United States — the world’s biggest economy and hardest-hit nation — jobless Americans were bracing for an end to extra unemployment payments yesterday after Congress failed to reach a deal on extending benefits.

It came just a day after the US posted a second-quarter GDP drop of 9.5 per cent from the same period a year ago, the worst it had ever recorded.

Billion-dollar pharma deals

One sector that is not struggling is pharmaceuticals, as the world pins its hopes on the race for a vaccine.

Pharma giants Sanofi and GSK announced they will receive up to US$2.1 billion (RM8.9 billion) from the US government to develop a Covid-19 vaccine.

Sanofi has also struck a deal with the EU for 300 million doses if the treatment works.

And the US-German pharma team-up of Pfizer and BioNTech signed a deal with Japan to provide 120 million doses of their vaccine contender.

They kept the size of the deal under wraps, but the US government recently put the cost of 100 million doses from those firms at almost US$2.0 billion.

But many businesses are in freefall, with airline conglomerate IAG, the owner of British Airways, posting a first-half loss of €3.8 billion (RM18.9 billion) and UK bank NatWest sliding into the red, while Dutch airline KLM and Swedish truck maker Scania each said they were shedding 5,000 jobs.

Fresh lockdowns

While strict European lockdowns were effective in bringing cases and deaths under control, an uptick in cases means the restrictions are far from over, even if they have become more localised and specific.

Britain was the latest to impose new measures yesterday, banning different households from meeting indoors across Greater Manchester, and parts of Lancashire and Yorkshire.

With large Muslim populations in those areas, the ban was painfully timed, on the eve of the Eid-al-Adha festival.

“We take this action with a heavy heart, but we can see increasing rates of Covid across Europe and are determined to do whatever is necessary to keep people safe,” British Health Secretary Matt Hancock said on Twitter.

Britain also delayed plans to reopen casinos, bowling alleys and skating rinks, due to begin today, while also putting off plans to resume indoor performances and increase stadium crowds.

The sacred hajj pilgrimage in Saudi Arabia has been held with 10,000 Muslim faithful allowed, instead of the roughly 2.5 million that attended last year.

Pilgrims were brought in small batches into Mecca’s Grand Mosque, walking along paths marked on the floor, in sharp contrast to the normal sea of humanity that swirls inside its walls.

Germany added three northern Spanish regions to its list of high-risk destinations, including the tourist hotspots of Barcelona and the beaches of the Costa Brava, meaning anyone arriving from those areas will have to produce a negative coronavirus test or go into quarantine for 14 days.

Denmark reversed its stance on face masks, recommending them on public transport just days after saying they did not “make sense in the current situation.”

“The pandemic is a once-in-a-century health crisis, the effects of which will be felt for decades to come,” WHO chief Tedros Adhanom Ghebreyesus said yesterday at a meeting to assess the situation six months after declaring a global emergency.

Tedros has warned that young people should take greater efforts to stop the spread of the disease, and a new study found that hundreds of children in the US state of Georgia had contracted the virus at a summer camp last month. — AFP

Related Articles