In the flash estimate, Eurostat reports that real GDP declined 1.6% (seasonally adjusted annualized rate) in the European Union (EU27) and 2.4% in the Euro Area (EA19) in the fourth quarter of 2020. The preliminary flash estimates were -2.0% in European Union and -2.8% in the Euro Area. In the third quarter, activity was up 54.8% in the EU27 and 59.9% in the EA19 at annualized rates. 

COVID-19 containment measures weighed on fourth quarter growth following a strong rebound in the third quarter. Compared with the same quarter of the previous year, seasonally adjusted real GDP was down 5.0% in the Euro Area and 4.8% in the EU27 in Q4 2020. In the previous quarter, year-over-year declines of -4.3% for the Euro Area and -4.2% for the EU27 were reported. 

Based on the flash estimates, annual GDP fell 6.8% in the Euro Area and 6.4% in the European Union in 2020.

A seasonally adjusted annualized rate shows what the percent change would be if the quarterly rate was compounded for four quarters. Reporting annualized rates facilitates comparability between annual and quarterly growth but can exaggerate change when series are volatile. The COVID-19 shocks do not indicate contraction of EU GDP by 1.6% in Q4.  It would take four quarters of compounded growth at the same pace as reported in Q4 to decrease EU GDP by 1.6%. Real GDP in Q4 decreased 0.4% in the EU27 and 0.6% in the EA19 compared to the previous quarter.

Source: Eurostat