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GDP and Employment Decline In The Euro Area, Rise In Cyprus In Q1 2021

GDP and Employment Decline In The Euro Area, Rise In Cyprus In Q1 2021

GDP and employment recorded a decline in the euro area, whereas they increased in Cyprus in the first quarter of 2021. Seasonally adjusted GDP decreased by 0.3% in the euro area and by 0.1% in the EU in the first quarter of 2021, compared with the previous quarter, but increased in Cyprus by 2.0% and in Greece by 4.4%, according to an estimate published by Eurostat, the statistical office of the European Union.

These declines follow falls in the fourth quarter of 2020 (-0.6% in the euro area and -0.4% in the EU. In Cyprus there was an increase of 1.1% and in Greece a rise of 3.4% after a strong rebound in the third quarter of 2020 (+12.6% in the euro area, +11.7% in the EU, +9.5% in Cyprus and +3.8% in Greece). Before, the sharpest decreases since the time series started in 1995 were observed in the second quarter of 2020 (-11.5% in the euro area and -11.1% in the EU).

Compared with the same quarter of the previous year, seasonally adjusted GDP decreased by 1.3% in the euro area by 1.2% in the EU, by 1.6% in Cyprus and 2.3% in Greece in the first quarter of 2021, after -4.7%, -4.4%, -4,4% and -6.9% respectively in the previous quarter. During the first quarter of 2021, GDP in the United States increased by 1.6% compared with the previous quarter (after +1.1% in the fourth quarter of 2020). Compared with the same quarter of the previous year, GDP increased by 0.4% (after -2.4% in the previous quarter). Ireland (+7.8%) and Croatia (+5.8%) recorded the sharpest increases of GDP compared to the previous quarter, followed by Estonia (+4.8%) and Greece (+4.4%). The strongest declines were observed in Portugal (-3.3%) and Slovakia (-2.0%), followed by Germany (-1.8%) and Latvia (-1.7%).

During the first quarter of 2021, household final consumption expenditure decreased by 2.3% in the euro area and by 1.9% in the EU (after -2.9% in the euro area and -2.7% in the EU in the previous quarter). Gross fixed capital formation increased by 0.2% in the euro area and by 0.8% in the EU (after +2.5% and +2.0% respectively). Exports increased by 1.0% in the euro area and by 1.1% the EU (after +3.8% and +4.0%). Imports increased by 0.9% in the euro area and by 1.1% in the EU (after +4.5% and +4.4%).

Household final consumption expenditure had negative contribution to GDP growth in both the euro area and the EU (-1.2 and -1.0 percentage points – pp, respectively) while the contributions from gross fixed capital formation (+0.1 in the euro area and +0.2 in the EU) and changes in inventories (+0.7% in the euro area and +0.6 in the EU) were positive. The contribution from the external balance was slightly positive for the euro area and neutral for the EU, while the contributions from government final expenditure were neutral in both zones.

Based on seasonally adjusted figures, GDP volumes were 5.1% and 4.6% below their highest level of the fourth quarter 2019 for the euro area and EU, which corresponds to the level of the fourth quarter 2016 for the euro area and is slightly above the level of the first quarter 2017 for the EU. For the United States, GDP was 0.9% below the level of the fourth quarter 2019 but recovered to its previous level of the second quarter 2019.

The number of employed persons decreased by 0.3% in the euro area and by 0.2% in the EU in the first quarter of 2021, compared with the previous quarter. In the fourth quarter of 2020, employment had increased by 0.4% in both the euro area and the EU. Compared with the same quarter of the previous year, employment decreased by 1.8% in the euro area and by 1.6% in the EU in the first quarter of 2021, after -1.8% and -1.5% respectively in the fourth quarter of 2020.

Hours worked decreased by 0.8% in the euro area and by 0.2% in the EU in the first quarter of 2021, compared with the previous quarter. Compared with the same quarter of the previous year the declines were 3.4% in the euro area and 2.6% in the EU respectively.

In the first quarter of 2021, Hungary (+1.1%), Spain (+1.0%), Cyprus and Lithuania (both +0.8%) recorded the highest growth of employment in persons compared with the previous quarter. The largest decreases were observed in Latvia (-3.9%), Greece (-1.7%) and Slovakia (-1.1%). At this stage, data for Ireland and Romania are not included in the graph, due to a delayed publication in Ireland and series break observed in the first quarter 2021 in Romania.

Based on seasonally adjusted figures, Eurostat estimates that in the first quarter of 2021, 205.6 million people were employed in the EU, of which 157.6 million were in the euro area. In relation to the COVID-19 pandemic, employment in persons was 3.4 million in the euro area and 3.8 million in the EU below the level of the fourth quarter of 2019.

The combination of GDP and employment data allows an estimation of labour productivity. The analysis of growth compared to the same quarter of the previous year shows that productivity growth (based on employed persons) fluctuated around 1% for both zones between 2013 and 2018. In relation to the COVID-19 pandemic, productivity based on persons increased compared to the same quarter of the previous year with 0.6% for the euro area and 0.4% for the EU. Based on hours worked, productivity compared to the same quarter of the previous year increased by 2.0% for the euro area and to 1.1% for the EU.

 

Source: CNA

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