Growth in Europe rebounded sharply in the third quarter of the year, according to data published Friday, but hardly anyone was celebrating. Economic activity remains well below what it was a year ago as a surge in coronavirus cases and new lockdowns have raised the risk of another slowdown.
Gross domestic product in the 19 countries that use the euro rose 12.7 percent from July through September compared with the previous quarter, the European Union statistics office said. But economic output was 4.3 percent lower than the same time last year — a severe recession by any standard — and could sink further as Germany, France and other countries order restaurants and theaters to close and restrict travel.
European countries are increasingly desperate to contain the virus before it overwhelms hospitals. But the economic cost will be high, particularly in industries that depend on person-to-person contact. The longer the pandemic lasts, the greater the risk of mass bankruptcies among businesses like hotels, fitness studios and nail salons, leaving lasting scars on the economy.
“There is unfortunately still no evidence that you can simply turn on and off an economy like a light switch without causing more structural damage, maybe even a short circuit,” Carsten Brzeski, global head of macroeconomics at ING Bank, said in a note to clients.