The emergence of the novel coronavirus cases in Europe has fueled fears that the region’s robust economic recovery could be threatened by another harsh winter.
So far, the new wave of Covid-19 has had only a limited impact on the business activity of the 19 countries that use the euro, and the IHS Markit Purchasing Managers’ Index, a leading indicator of the economy, rose in November after falling to a six-month low in October, according to data released this week, but the future expectations are bleak, according to a report published by the Spanish newspaper “Economista”.
According to the report, Austria announced last week that it will return to the national lockdown, the rise in infections in Germany also raised questions about whether the largest economy in the region can re-impose sweeping restrictions.
Chris Williamson, the chief trade economist at IHS Markit, said: “The strong expansion in business activity in November defied economists’ expectations of a slowdown, but is unlikely to prevent the Eurozone from experiencing slower growth in the fourth quarter, especially as rising virus cases will cause more outbreaks. shocks to the economy in December.
Eurozone consumer confidence fell “sharply” in November, and according to the European Commission, IHS Markit reported that the company’s forecast for this month for future economic output “has deteriorated to the lowest level since January”.
More data is needed to assess what the restrictions in Europe could mean for the region’s economy, said Ruben Segura Kaiwela, an economist for Europe at Bank of America. Businesses and consumers are learning to adapt.
Europe was particularly affected by the pandemic in 2020. Economic output fell 6.3% in the Eurozone compared to a 3.4% drop in the United States.