Page 13 - economic report 2020

Nor was the impact of the pandemic uniform The Eurozone economy shrank
among the developed countries. In 2020, the almost twice as much as the US
Eurozone was the most affected region, with
an average decline of 6.5%. On the other hand, economy due to the pandemic.
the fall in GDP in the USA was 3.5% and in
Japan 4.7%, much closer to the global decline in GDP (-3.2%).

Outside the Eurozone, the steep downturn in the UK economy stands out, where GDP plummeted
9.8% in 2020, one of the worst falls to be seen among the advanced economies. There are two
main reasons to explain the severity of the fall. On the one hand, the extent to which the virus
spread among the population, forcing the government to impose very restrictive social isolation
measures for long periods of time. On the other hand, the impact of Brexit in the last few months
of the year. Remember that the United Kingdom formally left the European Union on 31 January
2020, but it was not until 24 December 2020 that a trade agreement was finally signed that came
into force on 1st January 2021.

The impact of the pandemic was lower on
the US economy than on Europe because GDP GROWTH - Annual variation rates, in %
it implemented less restrictive measures to Chart 1.2
contain the spread of the virus, and also due
to more vigorous implementation of policies
to combat the economic effects of the crisis.
However, the impact on the labour market was
significant at the start of the pandemic, as the
unemployment rate went from a historic low 11
of 3.5% in February 2020 to 14.8% in April,
the highest level since World War II (8.1% on
annual average in 2020). Note that the strong
economic incentives given to businesses and USA Eurozone
citizens and the decline in tax revenue explain f: IMF forecasts (July 2021).
why the public deficit more than doubled in Source: IMF.
one year, going from 6.7% of GDP in 2019 to
15.8% in 2020, according to the OECD. The European economies that
most depend on tourism saw the
The Eurozone economy was one of the areas greatest falls in GDP.
that suffered most from the consequences
of COVID-19. According to Eurostat, GDP
went from growing 1.3% in 2019 to declining 6.6% in 2020, especially due to the steep fall in
domestic demand. Although all countries entered into recession this year, the severity of the
impact of the crisis was not uniform. The economies that were most affected were those situated
in southern Europe, where the tourist sector has a major influence on GDP. This was the case
in Spain (-10.8%), Italy (-8.9%), Greece (-8.2%), France (-7.9%) and Portugal (-7.6%). On the other
hand, more industrialised economies, such as Germany (-4.9%) and other countries outside the The external environment of the Andorran economy | I. The international economy
EMU, such as Poland (-2.7%) and the Czech Republic (-5.6%), saw smaller falls in GDP. Another
difference between countries is the level of fiscal effort made by governments to combat the
economic consequences of the pandemic. According to the IMF , among the ranks of European
1
economies that mobilised most public resources in the way of public spending or a reduction of
the tax burden to deal with COVID-19, were Germany (11% of GDP), Italy (8.5%), Belgium (8.0%),
France (7.6%) and Spain (7.6%).

1 Fiscal Monitor Database of Country Fiscal Measures in Response to the COVID-19 Pandemic. IMF (April 2021)
https://www.imf.org/en/Topics/imf-and-covid19/Fiscal-Policies-Database-in-Response-to-COVID-19