Brussels, Sep 7 (IANS): The Covid-19 pandemic has posed a major impact on retail trade and the demand for services in the European Union (EU) as many countries mandated the closure of retail shops while bars and restaurants had to spend several months with chairs stacked on tables and shutters closed.

The pandemic caught most people unprepared and in an attempt to fight the pandemic, the member states of the EU have implemented a variety of measures, including restrictions on non-essential travel, Xinhua news agency reported.

Non-essential production was stopped, and several countries imposed regional or even national lockdown measures, which further stifled economic activities.

Tourism was also wiped out, forcing hotels to close their doors and airlines to cancel flights, causing havoc in these industries.

According to a report issued on September 3 by Eurostat, the statistical office of the EU, retail trade in the bloc in July 2021 decreased by 1.9 per cent month-on-month, after a moderate 1.4 per cent increase in June on the back of strong increases in February and March, dropping again in April and picking up in May.

Eurostat said the situation in the 19-member eurozone was worse: there the drop was 2.3 per cent.

Bert Colijn, senior financial expert at ING Bank, said that this was not what analysts were expecting and described it as a "bad start to the third quarter of the year" for retail sales in the eurozone.

However, he was not disheartened by the outlook.

"The big question is whether the recovery can carry on at a decent pace and quickly close the gap with pre-pandemic gross domestic product (GDP).

"It looks like the consumers are set to contribute to that positively in the coming quarters as unemployment is decreasing rapidly and incomes are therefore boosted.

"Consumer confidence has come off recent highs but remains historically elevated. All this bodes well for retail sales growth in the coming quarters and subsequently for a fair pace of GDP growth," he said.

Services across the bloc were equally affected but are slowly picking up. The latest statistics showed that the total turnover of services in the EU in the second quarter of this year increased by 3.2 per cent compared with the first quarter.

This relatively strong increase followed an increase of 1.5 per cent in the first quarter of 2021 and of 2.1 per cent in the last quarter of 2020.

In the first and second quarters of 2020, the services industries' turnover declined by 3.6 per cent and 17.4 per cent respectively, picking up by 10 per cent in the third quarter.

In the second quarter of this year, the increase was the strongest in accommodation and food services (28.4 per cent), while the turnover of transportation and storage services increased by 4.6 per cent.

According to Eurostat, the effects of the Covid-19 crisis were more dramatic than those of the 2008 financial crisis.

The index for the EU-wide turnover of hotel and restaurant services was reduced by almost 80 points within half a year.

The index for transportation services went down by more than one quarter, with the strongest losses recorded in air transport.