The European economy has started to follow the usual trend of lagging other major economies in the world when it comes to recovering from the crisis, according to a Bloomberg report.
This is the conclusion of the latest report from the International Monetary Fund, which lowered its estimates for 2021 growth across Europe and highlighted weaker overall performance compared to that of China and the United States.
Such divergent developments reflect the severity of the eurozone lockdown measures to manage the pandemic, as well as a disrupted and delayed vaccination campaign, threatening to deepen what is already looming on the horizon of the W-shaped recession.
Political uncertainty about future German leadership and the crisis in Italy further obscures expectations.
Unlike Europe, China is in the midst of a V-shaped recovery, and the United States is forging ahead with more confidence with a new president overseeing the injection of additional incentives and a more aggressive vaccination effort.
“We are starting the year in a weaker situation, especially in Europe, because most of Europe appears to have entered recession again,” said Janet Henry, chief economist at HSBC Holdings. “China has already returned to pre-epidemic levels, and we estimate that the United States will do so by the end of this year. As for the eurozone, this moment will come at the end of 2022.”
This difference is highlighted in the IMF forecast, which indicates an increase of only 4.2% in the eurozone this year, after a decline of 7.2% in 2020. The US economy is expected to rise 5.1%, more than recovering from Recover. 3.4% down last year.
In fact, the Fund has lowered its estimate of eurozone growth by 2021 by one percentage point. Germany, France, Italy and Spain, the four largest economies in the eurozone, also saw a decline in growth estimates for 2021, according to CNBC.
As for the global economy, the fund raised its 2021 growth estimate by 0.3% to 5.5%, while warning that it would continue to face “exceptional uncertainty.”
Bloomberg writes that the most pressing reason for Europe’s relative weakness is the need for tighter and longer lockdowns to fight the pandemic. Slow immunization programs also threaten to deepen the disparity between Europe and the rest of the world.
However, European strategies hope that their economies will remain solid off the surface. “The savings are kept in an incomplete state of outstanding animation. I think the scars are actually smaller than most people think,” says Callum Pickering, an economist at Berenberg.