The increased spending of European consumers by the increased liquidity that had accumulated due to the continuous economic shutdowns and lockdowns, gave a dynamic impetus to the field of retail, catering, and steadily increased factory production which has not yet reached pre-pandemic levels.
As a result of these factors, Eurostat released data on Eurozone GDP, which jumped 13.7% for Q22021 compared to Q22020, and 2% for Q22021.
by Thanos S. Chonthrogiannis
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Eurozone growth has not returned to pre-pandemic levels. This will be achieved if the above GDP growth continues at these rates until the end of 2021.
Unemployment in the eurozone fell to 7.7% in June as expected.
Challenges and obstacles
1. The increased likelihood of new local rather than total lockdowns in member countries due of new mutations in Covid-19 virus will slow down the dynamic growth of GDP. The leaders of the Eurozone member countries have said and agreed that there will be no general lockdown against a fourth and /or fifth wave of the pandemic. That is why they are speeding up their vaccination programs.
2. The possibility of problems in the supply chain and especially in maritime transport to continue to exist and not be normalized until the end of time. In this case, the resilience of the retail trade will be tested, and given that the huge increases in maritime fares so far will inevitably be passed on to the European consumer, reducing his disposable income and consequently his demand and consumption.
3. The inflation rate moved to 2.2% in July. The ECB considers the phenomenon temporary and expect the index to move close to 1.5% by 2023, due to downward pressures on wages, pressures that balance as a point the increases in prices of goods and services, keeping inflation under control.
4. The ECB makes no reference to the start of the monetary policy named tapering-the gradual reduction of the rate of asset purchases.
Given that unemployment is low, the ECB obviously expects Eurozone GDP to reach pre-pandemic levels first and then move in the direction of tapering. We believe that in Q12022 the tapering application will start gradually.
