Services Gain Ground in the Post-Covid Recovery

How does the services sector recover from the crisis? Covid-19 brought a halt to the world economy, and the indices that measured European activity plummeted in April and May 2020.

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Services Record Strong Post-Covid Bounceback

Industry, construction, services, and commerce recorded their most significant drop in activity since there were records, but since then, the economy has picked up, and now they have even exceeded the levels of February two years ago.

The sector that has increased the most compared to the pre-pandemic stage is that of services. Between February and April 2020, there was a 16% drop in activity, but in March 2022 it managed to reach pre-pandemic levels, registering 7.8% more than the same period from two years ago, according to data published by Eurostat.

Currently, with the start of the war in Ukraine, services are the sector with the highest activity index, now registering at 118 points.

Commerce Recovery Is Second to Services Sector

Commerce ranks second behind services in the post-pandemic recovery two years later. The volume of merchandise transacted in the European Union also fell significantly between February and April 2020, more than 20%, but since June 2020, its trend has been positive.

In February 2022, the sector recorded an increase of 4.8% compared to the pre-pandemic period.

Even so, commerce has registered a more irregular evolution than services, registering decreases and increases throughout the last months.

Secondary Industry Has Also Recovered

Regarding industry, its activity also fell below 20% with the arrival of the pandemic. Specifically, the secondary sector registered a 26.8% decrease in its activity in April 2020.

However, since then, the activity has been increasing until reaching pre-pandemic levels and even registering a slight increase last April, of 1.9%.

Building Construction Services Make +1.8% Post-Covid Recovery

As for building construction services, activity fell by 25% from February to April 2020. A year later, in March 2021, pre-crisis levels had almost been reached. Now, the latest data from April 2022 show that activity in building construction services has grown further to 1.8% above its pre-pandemic levels.

Euro Economy Registers 5.4% Growth, Still Trails Pre-Pandemic Levels

The European economy as a whole grew by 5.4% in 2021 but still has not reached pre-pandemic levels.

Specifically, the combined 2021 Gross Domestic Product (GDP) of the 27 Euro countries was 0.8% below that registered in 2019, after it was cut by 5.9% in 2020.

Although this year had started well for the continent’s economy, with a 5.4% increase in GDP in the eurozone, the war in Ukraine has frustrated the EU’s growth aspirations.

According to the Union’s forecasts, it is estimated that the eurozone economy will grow by 2.7%, and inflation will reach an all-time high of 6.8%.

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(Featured image by Cytonn Photography via Unsplash)

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First published in Planta Doce, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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