/Eurozone economy declines by record 3.8 percent in first quarter

Eurozone economy declines by record 3.8 percent in first quarter

Business is grinding to a halt after governments shut down activity to stop the coronavirus from spreading | Hannelore Foerster/Getty Images

Euro area on pace for worse recession than 2009.

The eurozone economy contracted a record 3.8 percent in an initial estimate for the first three months of the year compared to the previous quarter, according to the EU statistics office.

A Eurostat preliminary flash estimate shows business grinding to a halt after governments shut down activity to stop the coronavirus from spreading.

The data center said in its analysis that these figures signal “the sharpest declines observed since time series started in 1995.”

Tuesday’s figures show the euro area is well on its way toward a recession that outstrips the financial crisis in 2009, when its economy shrunk by 4.5 percent.

The European Commission’s economic chief, Paolo Gentiloni, on Monday told EU lawmakers that he expects the eurozone economy to contract by around 7.5 percent this year.

The data puts more pressure on the bloc’s policymakers to come up with a recovery plan that can kick start the economy once the coronavirus subsides and government lockdowns ease.

Leaders have already signed off on a €540 billion package of measures intended to safeguard workers, companies and governments from economic ruin. The measures should be operational by June 1.

The European Commission, meanwhile, is scrambling to prepare a €323 billion recovery fund, linked to a new and expanded seven-year EU budget, that can support EU countries in need through loans and grants.

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