EU's economic recovery still faces obstacles, but overall outlook improving

(Xinhua) 13:36, August 07, 2021

ROME, Aug. 6 (Xinhua) -- Europe's post-pandemic economic recovery appears to be gaining steam, though analysts warn of several factors that could impede growth in the coming months.

The latest figures from Eurostat, the European Union's statistics agency, reported in late July that seasonally adjusted gross domestic product across the EU increased by 13.2 percent in the second quarter compared to the same period last year.

Economists said the growth is partly due to the second quarter of 2020 that saw the biggest impact from coronavirus lockdowns. But Eurostat also noted that EU economies grew 1.9 percent compared to the first quarter of this year, and it broadly raised its outlook for the rest of the year.

For the 19 countries in the euro currency zone, the results were even stronger: 13.7 percent growth year-on-year in the second quarter and 2.0 percent growth compared to the previous quarter.

However, growth has been uneven across the EU, with countries hardest-hit by the pandemic last year growing faster than the EU as a whole. For example, Italy and Spain had 2.7 percent and 2.8 percent quarter-on-quarter growth in the second quarter, respectively, while the EU's two largest economies, Germany and France, saw slower growth.

Surging inflation has also hindered economic growth. Eurostat has raised its estimates for full-year-inflation in the Euro zone to 2.2 percent, an increase from 1.9 percent a month earlier and above the European Central Bank's full-year target of 2.0 percent.

At the same time, emerging new variants of the coronavirus present a continued risk in the EU where more than 60 percent of the eligible population has been fully vaccinated.

Other risks cited by economists include a global economic slowdown negatively impacting EU trade, less spending in the face of the crisis, and EU recovery funds not being spent effectively in some countries due to political factors.

Paul O'Connor, an analyst studying with London-based Janus-Henderson, a global asset management group, has said that while some factors, like the use of public transport, shopping, and the use of sports facilities are showing improvement, there are other areas where there has been "continued caution," such as a return to the office.

That point was reflected in a survey from Ipsos Moris, a market research company based in London, showing that more than 40 percent of respondents in Britain were "uncomfortable" with the idea of traveling abroad or attending large public gatherings. A spokesman from the company told Xinhua that indications showed a broadly similar trend across Europe.

Still, according to Veronica De Romanis, a professor of European economics at Rome's LUISS University, the overall trends in Europe remain encouraging.

"It is likely that as long as the vaccines remain effective, the recovery fund money is spent effectively, and we don't have any unexpected surprises, we will continue to see economies recover, with most returning to pre-pandemic levels at some point next year," De Romanis told Xinhua.

(Web editor: Zhang Wenjie, Bianji)


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