GDP up by 9.4% in Cyprus

In the third quarter of 2020, seasonally adjusted GDP increased by 12.5% in the euro area by 11.5% in the EU, by 2,3% in Greece and 9.4% in Cyprus, compared with the previous quarter, according to an estimate published by Eurostat, the statistical office of the European Union.

These were by far the sharpest increases observed since time series started in 1995, and a rebound compared with the second quarter of 2020, when GDP had decreased by 11.7% in the euro area by 11.3% in the EU, -14.1% in Greece and -13.1% in Cyprus.

Compared with the same quarter of the previous year, seasonally adjusted GDP decreased by 4.3% in the euro area, by 4.2% in the EU, by -11.7% in Greece and by -4.4% in Cyprus in the third quarter of 2020, which represents a partial recovery after -14.7%, -13.9%, -14.2 and -12.3% respectively in the previous quarter.

During the third quarter of 2020, GDP in the United States increased by 7.4% compared with the previous quarter (after -9.0% in the second quarter of 2020). Compared with the same quarter of the previous year, GDP decreased by 2.9% (after -9.0% in the previous quarter).

France (+18.7%), Spain (+16.7%) and Italy (+15.9%) recorded the sharpest increases of GDP compared to the previous quarter. These countries were also among the highest decreases in the second quarter. Greece (+2.3%), Estonia and Finland (both +3.3%) and Lithuania (+3.8%) had the lowest increases of GDP. Except for Greece, which registered a decrease of 14.1%, these other countries also had less pronounced declines during the second quarter.

During the third quarter of 2020, household final consumption expenditure increased by 14.0% in the euro area and by 13.2% in the EU (after -12.4% in the euro area and -12.0% in the EU in the previous quarter). Gross fixed capital formation increased by 13.4% in the euro area and by 11.7% in the EU (after -16.0% and -14.3% respectively). Exports increased by 17.1% in the euro area and by 17.2% the EU (after -18.9% in both zones). Imports increased by 12.3% in the euro area and by 12.9% in the EU (after -18.2% and -18.0% respectively). Household final consumption expenditure had a very strong positive contribution to GDP growth in both the euro area and the EU (+7.3 and +6.9 percentage points – pp, respectively) and the contribution from gross fixed capital formation was also positive in both zones (+2.8 and +2.5 pp respectively). The contributions from the external balance and government final expenditure were positive in both zones, while the contribution of changes in inventories was slightly negative in the both zones.

Based on seasonally adjusted figures, GDP volumes recovered significantly in the third quarter of 2020 compared to the previous quarter. They are however still 4.4% below the level at the end of last year for the euro area and EU, slightly above the levels of first quarter 2017. For the United States, GDP was 3.5% below the level of the fourth quarter of 2019, which is the lowest level since the first quarter of 2018.

Meanwhile, the number of employed persons increased by 1.0% in the euro area,  by 0.9% in the EU, decreased by -0.4% in Cyprus and increased by 1.2% in Greece in the third quarter of 2020, compared with the previous quarter.

These were the strongest increases observed since time series started in 1995. In the second quarter of 2020, employment had decreased by 3.0% in the euro area by 2.8% in the EU, by -0.9% in Cyprus and -2.8% in Greece.

Compared with the same quarter of the previous year, employment decreased by 2.3% in the euro area by 2.0% in the EU, -2.0% in Cyprus and -1.8% in Greece in the third quarter of 2020, after -3.1%,  -2.9%, -1,2% and -3.0% respectively in the second quarter of 2020.

Hours worked increased by 14.8% in the euro area and by 11.9% in the EU in the third quarter of 2020, compared with the previous quarter. Compared with the same quarter of the previous year the declines were 4.5% in the euro area and 3.7% in the EU respectively . These data provide a picture of labour input consistent with the output and income measure of national accounts.

In the third quarter of 2020, Ireland (+3.3%), Spain (+3.1%) and Austria (+3.0%) recorded the highest growth compared with the previous quarter. The largest decreases were observed in Lithuania (-1.9%), Romania (-1.0%), and Bulgaria (-0.5%). The decrease in hours worked was generally much more pronounced for all Member States.

In Cyprus the growth of employment in hours was 2.1% and in Greece 29.9% compared with the previous quarter and -5.3% and -4.6% compared to the same quarter of 2019.

Based on seasonally adjusted figures, Eurostat estimates that in the third quarter of 2020, 205.2 million people were employed in the EU, of which 157.4 million were in the euro area. In relation to the COVID-19 pandemic, employment in persons is 3.6 million in the euro area (-2.2%) and 4.3 million (-2.1%) in the EU below the level of the fourth quarter of 2019 . Compared to the fourth quarter of 2019, the number of hours worked was 4.6% lower in the euro area and 3.6% lower in the EU.

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 recovered from the previous sharp drop in the third quarter 2020, but remained negative compared to the same quarter of the previous year with -2.2% for the euro area and -2.3% for the EU.

Based on hours worked the impact on productivity was more limited. In the euro area there was a slight increase in productivity based on hours worked compared to the same quarter of the previous year of 0.4%, while for the EU productivity declined slightly by 0.5%.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 recovered from the previous sharp drop in the third quarter 2020, but remained negative compared to the same quarter of the previous year with -2.2% for the euro area and -2.3% for the EU.

Based on hours worked the impact on productivity was more limited. In the euro area there was a slight increase in productivity based on hours worked compared to the same quarter of the previous year of 0.4%, while for the EU productivity declined slightly by 0.5%.