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October 22, 2020

Recession – Europe heads for double-dip – US fails to learn from 2008-9

By Paul Dennis

22 October

Experts believe that European countries returning to lockdowns may result in another gross domestic product (GDP) stumble.

While manufacturing countries such as Italy, Germany, and Belgium seem to be doing slightly better, Spain, France, and the Netherlands will be witnessing shrinking GDP in the fourth quarter.

Ludovic Subran, group chief economist at Allianz, shared his views with financial news network Cheddar, on how the rise in coronavirus cases in Europe could send the region into a second phase of recession.

He added that countries like France, Spain, Ireland, and the Netherlands are mostly likely to return to lockdown, resulting in double-dip in Europe’s economy.

Even though the dip will not be as severe as -20% in the second quarter, it will be daunting for service-driven economies, as policymakers and governments will have to take crucial decisions regarding increased expenditure on curfew restrictions and more, he further added.

Allianz research further predicts shrinking GDP in Q4 2020, with an estimated -1.3% quarter-over-quarter GDP drop in Spain, -1.1% quarter-over-quarter GDP drop in France, and -1.0% quarter-over-quarter GDP drop in the Netherlands.

Meanwhile, Lisa D Cook, an academic economist, re-tweeted on how the current economic situation amid the coronavirus pandemic and the US government’s response suggests there were no lessons learnt from the 2008-2009 recession.

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