The full extent of the European industrial output decline that has followed as a result of the Coronavirus-related lockdowns that have been put in place across the bloc have just been revealed. Eurostat, which collects economic information on behalf of the European Commission, reported that the drop of 17.1% in April is the biggest fall since records started to be kept for such matters in 1991. The record pushed the previous holder of that inauspicious claim to fame back into second place; that was the fall of 11.3% in March. The extent of Eurozone industrial production is now back at levels last seen in the mid 1990s. However, more up to date though less detailed data indicators suggests that in May there have been the first signs of a limited recovery, though the new(ish) President of the European Central Bank, Christine Lagarde, described the recovery so far as only being 'tepid'. It might nevertheless be a small sign of encouragement that things are starting to improve, though it should be noted that the less detailed figures which have being revealed for this more recent period are subject to final confirmation and validation and the reality may not be exactly the same as these provisional figures suggest.
There was some limited variation on a country-by-country basis when comparing the drop in outturn but not really anything which appears to be statistically significant across the major economic players. Industrial output fell in Spain by 21.8%, in France by 20.1%, in Italy by 19.1% and in Germany by 18.0%. The drops were however slightly worse in Hungary, Romania, Slovakia and the Czech Republic where output dropped between 23% and 30%. This is felt to be due to a contraction in German demand which has had a particular knock-on effect on them. UK output, which dropped by 20.3% according to figures released separately by the Office for National Statistics, is broadly in line with its mainstream European counterparts. However, in both Germany and France the decline in, or rather the almost complete suspension of activity by, the car-making industry has led to both countries announcing measures to intervene and provide financial support to help them survive the crisis.
What is more notable though is that some countries, namely Finland, Denmark, Croatia, the Netherlands, Latvia and Ireland saw much smaller drops in output of 8% or less. This shows that the impact of Coronavirus economically does vary to some extent by country when we widen the analysis. It can also differ across various sectors. Manufacturing of motor vehicles has been hugely affected by the pandemic, as has the aerospace industry and hospitality sectors generally. Other areas, such as pharmaceuticals, farming, food and energy production in contrast dropped very slightly and appeared to be the least affected. All in all the conclusion from looking at this data is that although the economic impact of the pandemic has been significant in all cases, there may be some countries and some sectors which are better placed to bounce back than others and therefore emerge from recession more quickly. As time passes, and the virus hopefully comes more and more under control, we should be able to judge whether indeed this is the case.
Wayne Bartlett is an author for accountingcpd. To see his courses, click here.