How much ground will Europe lose in the global economic race? This is one of the big questions for the next three months, according to economists.
Due to the intense globalization of the world economy, the economic recovery in Europe in the past coincided with the recovery in the United States, the largest economy in the world. But in this Corona crisis, it becomes very unlikely, according to analysts, due to one big difference between the two economic blocs: the vaccination rate.
The US campaign is running at full speed, with 30 percent of the population already receiving at least one dose. The European Union is stuck at 11 per cent. As a result, the United States has built a larger, if not conclusive, shield against the contagious corona variants.
According to economists, a large-scale reopening of the US economy is certainly likely in the next three months. That still seemed like a bridge too far for Europe. Even with the acceleration of the vaccination campaign in May, on which many European politicians rely, the reopening of the European economy will almost certainly take place in stages.
Keynes is back in full
Additionally, US President Joe Biden put a turbo on the economy this week, with A. Kinxian Old recipe: Major infrastructure businesses must boost economic demand, create local jobs, and modernize the basic structure of the US economy. The comparisons to the New Deal, President Franklin Delano Roosevelt’s post-Great Depression bailout, were not far-fetched. The stimulus policy is expected to encourage households to consume and businesses to invest and hire new workers. The implications for state finances are a cause for concern later.
The “ Recovery Tracking ” from the consultancy Oxford Economics, which relies on economic indicators but also on health and mobility metrics (such as air traffic), shows a clear upward trajectory since Joe Biden took office as president, which is also reflected in stock prices. Oxford believes that the US economy is heading for a “small boom” in these spring months.
Europe cannot come
Contrary to optimism about the US economy, concerns are growing about the Eurozone. French Economy Minister Bruno Le Maire said on Friday that the French government will have to abandon its target growth rate of 5.8 percent as France enters a new national lockdown for at least four weeks from Saturday evening. “It goes without saying that if schools close and 150,000 companies cannot run much of the tourism industry, there will be an impact,” CNNews said. He did not want to set a new target number yet.
There is still a chance for a recovery in the eurozone in the coming months, says Peter Vanden Haute, economist at ING. “We believe that some of the surplus savings collected by the households will be gradually returned to the economy, which will stimulate the recovery in the second half of the year.” According to ING Models, this is currently the most likely scenario for economic growth in 2021:
- United States: 6.9%
- Eurozone: 3.6%
- China: 7.0%
- Japan: 3.5%
Or even: The United States will roughly keep pace with the growth pace of China, which has been re-emerging for some time, and will grow twice as fast as Europe or Japan. Thus, ING is more optimistic about the US than before, while the European outlook is revised down. For example, the bank no longer expects 3.6 percent growth for the Belgian economy in 2021, but only 3.0 percent.