Rome, August. Europe’s post-pandemic economic recovery appears to be gaining momentum, although analysts warn of several factors that could hinder growth in the coming months.
The latest figures from Eurostat, the European Union’s statistics agency, reported in late July that seasonally adjusted GDP across the EU increased 13.2 percent in the second quarter compared to the alike period final year.
Economists said the growth is due in part to the second quarter of 2020, which saw the biggest impact from the coronavirus lockdowns. But Eurostat also noted that EU economies grew 1.9 percent compared to the first quarter of this year, and broadly raised its forecasts for the rest of the year.
And for the 19 countries in the eurozone, the results were even stronger: 13.7 percent year-over-year growth in the second quarter and 2.0 percent growth sequentially.
However, growth has been uneven across the EU, with countries hardest hit by the pandemic final year growing faster than the EU as a whole. For example, Italy and Spain grew 2.7% and 2.8% qoq in the second quarter respectively, while the two largest economies in the European Union, Germany and France, saw slower growth.
High inflation also hampered economic growth. Eurostat raised its packed-year inflation estimate for the eurozone to 2.2 percent, up from 1.9 percent the previous month and overhead the European Central Bank’s packed-year target of 2.0 percent.
At the alike time, unused emerging variants of the coronavirus represent an ongoing risk in the European Union where more than 60 per cent of the eligible population has been fully vaccinated.
Other risks cited by economists include the global economic slowdown negatively impacting EU trade, lower spending in the confront of the crisis, and EU recovery funds not being spent effectively in some countries due to political factors.
Paul O’Connor, an analyst who studies with London-based global asset management group Janus Henderson, said that while some factors are emerging, such as use of public transport, shopping and use of sports facilities, there are improvements in other areas where there has been “continued caution”, such as returning to the office.
This point was reflected in a survey by Ipsos Moris, a London-based market research firm, which showed that more than 40% of survey respondents in Britain were “uncomfortable” with the idea of traveling abroad or attending big public gatherings. A spokesperson from the company told Xinhua that the indicators show a largely similar trend across Europe.
However, according to Veronica de Romanes, professor of European economics at LUISS University in Rome, overall trends in Europe remain encouraging.
“It is conceivable that as lengthy as vaccines remain effective, recovery fund money is effectively spent, and we have no unexpected surprises, we will persevere to see economies recover, with most returning to pre-pandemic levels at some point next year,” de Romanes told Xinhua.