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If the damage in employment, sentiment and consumption is structural "the vaccine will not cure it"


One after another, the macroeconomic indicators of the euro area point to a rebound in activity that is reaching records, as is the case of the German exports for the month of June. This more encouraging outlook, as a result of the confinement being left behind and the outbreaks are apparently under control, prompts the analysis houses to hastily revise their growth forecasts for the euro countries, which are now expected to be less dire than months ago. The arrival of a vaccine is a "risk to the upside" for Bank of America experts, although they warn that "the calendar plays a fundamental role" since the later, there will be damage to employment, sentiment and consumption that will be structural.

Thus, experts do not hide their surprise, in a recent report, that the GDP of the euro area stood at -12.1% quarter-on-quarter (40% annualized), above their forecasts (-13.4% quarter-on-quarter). Therefore, the US bank has updated its forecasts for the economy of the euro partners to -7.9% this year and 4.3% in 2021. For the moment, "the economic trends are reflected in the incidence of infections: The more the virus is controlled, the more sustainable the economic recovery trends will be, "the Allianz GI analysts point out. In addition, Bank of America agree to point out that the shock of the pandemic requires fiscal stimulus.

"There is a permanent loss of income that must be compensated with stimuli", they assure, and they encrypt these aid between 10% and 11%. "National policies generate 4% for this year and next. The recovery fund could complete it with another 1% for next year, in the best of cases," they indicate, resulting in "less growth, unemployment persistently higher and powerful disinflationary pressures. "

In this context, experts are reluctant to assess the consequences that the remedy against the virus may have on their forecasts, as it is still too intangible. WHO has reported that up to 6 vaccines are in an advanced stage of experimentation and the president of the United States, Donald Trump, has indicated that he hopes to have some of them ready in time for the presidential elections on November 3. However, analysts at the North American investment bank warn that "the tempos will directly influence the recovery."

In other words, "the later that such a vaccine or other highly effective remedy, even a perfect track and trace tool, arrives, the more endemic the impact of the pandemic will be, and therefore less effective the boost it will give to growth"They argue." The markets will probably respond positively to any news about vaccines, "they point out, but if it reaches the end of 2021, for example," the damage to the economy and labor markets will have lasted two years already, "so "The loss of jobs will be almost impossible to overcome."

Therefore, the long-term effect of the pandemic "It could limit the benefits a vaccine can offer", a point of view that coincides with that of other experts who assure that the treatment or remedy will not be the end of the Covid and its effects will last for years in the global economy.

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