Financial forecasts warn that the euro countries will not return to normal economic performance before Corona until 2022, and therefore it is better to provide an additional package of financial stimulus in order to address the disparity that has begun to appear between the countries of the union.
The Economist says:EconomistThe British – in a report – said that European countries were hit hard by the waves of the Corona virus, and now their economies are starting to recover. Vaccination has reached advanced stages in a number of countries, and quarantine measures have been widely eased.
On May 17, the number of night curfew hours were reduced in Italy, and on the 19th of the same month, residents of the French capital (Paris) were allowed to go out to cafes, after 6 months of closure.
In Germany, business owners feel the largest wave of optimism in two years, according to surveys published on May 25, and there is a general feeling of the beginning of economic recovery; But things will not be easy despite the promising indications.
recovering from corona virus
The magazine explains that before the outbreak of the Corona crisis, European Union countries were living in varying economic conditions, as the northern countries, such as Germany, were in better condition than the countries of the south, such as Spain and Italy.
The epidemic came to deepen the crisis in the troubled countries. Between the last quarter of 2019 and the second quarter of 2020, household consumption in Spain and Italy declined by 30% and 20%, while the rate of decline in Germany did not exceed 11%. The closure measures and the state of complete paralysis in the tourism sector have contributed to deepening this economic suffering.
According to the magazine, the indicators at the present time confirm that the countries most affected by the Corona crisis are the ones that started the economic recovery at a faster pace. Mobility data from the Google search engine (GOOGLE) in mid-May indicate that the pace of leisure and shopping travel has begun to return to normal levels in Italy and Spain faster than in France and Germany, and this may be due to the fact that shops and tourist destinations have opened more frequently. early.
There are other indicators that show some disparity, as data from the Indeed job search platform in Europe shows that there are more vacancies in Italy than in France and Germany.
3 factors explain the disparity
The magazine believes that there are 3 main factors that will determine the extent of the disparity in the levels of economic recovery between the countries of the European Union.
- The first factor: The speed of lifting restrictions and procedures that were previously imposed, as the abolition of travel restrictions is of great importance in Spain, which relied on tourism to provide 12% of GDP before the onset of the crisis. As for the strength of Germany’s industrial economy, it depends largely on the smoothness of production and the solution of supply problems.
- The second factor: The extent of consumers’ willingness to spend the money that was saved during the last period, as the sums accumulated by some during the quarantine period may help the affected countries to revitalize the commercial movement.
Compared to the French and Germans, the Italians and Spaniards were able to save more money during the last period; But this does not necessarily mean that they are willing to spend this money.
A survey conducted by a European bank of 5,000 consumers showed that Spaniards are less willing than others to enjoy their savings during this stage. Given the deteriorating situation in the labor market, this cautious attitude does not seem surprising in a country like Spain, where the unemployment rate reached 15% last March; That is 3 times the unemployment rate in Germany.
- The third factor: The strength of fiscal measures taken by governments will affect the pace of recovery in the European Union. There are fears of disparity in economic performance, which prompted the European Union to move towards approving a financial fund to help the most troubled economies.
This fund will inject cash into Italy and Spain in order to drive economic growth; However, some experts warn that European officials need to do more than that, as financial forecasts warn that the euro countries will not return to normal economic performance before Corona until 2022.، Therefore, it is better to provide an additional package of financial incentives in order to address the disparity that has begun to appear among the countries of the Union.