UNITED KINGDOM. London: With the growing COVID-19 cases, Europe’s economic woes seem to be worsening. There are mounting concerns around the potential economic damage as a new strain of the Coronavirus is circulating in Europe.
The International Monetary Fund (IMF) has recently updated its growth forecasts for the eurozone and has cut the growth expectations for the region to 4.2%, 1 percentage point less than initially expected.
The IMF’s forecasts don’t expect the eurozone’s economy to return to the end of 2019 growth level before the end of 2022. Eurostat, the European statistics office, has estimated that the eurozone economy has dropped by 0.7% in the last quarter of 2020, -5.1% compared to the same months of 2019.
In the third quarter of 2020, thanks to lower infection rates that allowed governments to partially reopen their countries, the eurozone saw a growth rate of +12.4%. These months also coincided with the vaccine approval news, hinting at the possibility that the pandemic could end soon.
A challenging vaccine rollout
The start of 2021 saw the majority of the eurozone’s countries reintroducing national lockdowns and tighter social restrictions, as infection rates soared again. The vaccine rollout has proved to be more complicated than expected due to supply shortages and disruptions in the distributions that have overshadowed the hope for a fast recovery.
In a press conference on Jan. 21, the European Central Bank’s president, Christiane Lagarde said, despite the vaccination campaigns representing an important milestone, “The pandemic continues to pose serious risks to public health and to the euro area and global economies. The renewed surge in coronavirus (COVID-19) infections and the restrictive and prolonged containment measures imposed in many euro area countries are disrupting economic activity.”
The struggle is real
In an interview with CNBC’s Squawk Box Europe, Erik Nielsen, group chief economist at UniCredit said, “Europe is in a deep hole, the pandemic is very very uncertain, the rollout of the vaccine is frankly disappointing in Europe and therefore the risk of a deeper hole is there.”
The European Commission has asked member states to vaccinate at least 70% of their adult population by summer in a bid to contain the spread of the virus and accelerate the bloc’s economic recovery.
Since Christmas, especially, the European leaders have been battling the rising infection rates. Till date 103 million cases of Coronavirus have been reported in Europe of which 57.3 million have recovered and 2.24 million have died.