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BofA: "US GDP will go from crawling to sprinting, but Europe will have to wait for 2022"

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The economic outlook for Europe are much less flattering than those of USA or China. This is what the experts of Bank of America (BofA), which point out that the Old Continent will grow next year, but it will do so at a slower rate than that of other regions, so it will not reach pre-crisis levels until the end of 2022. Recovery will be slow in the euro zone, while The United States will go "from crawling to sprinting."

"Unlike the United States or China, we believe that the euro zone will be stuck below pre-Covid-19 levels until the end of 2022, but decent growth aided by the effects of the recovery, fiscal stimulus and monetary policy can provide a certain relief factor, "the US bank strategists point out in their latest macroeconomic projections report.

His forecast is that the Eurozone economy will be "somewhat better" in 2021, after the 7% contraction expected for this year. BofA estimates that "the euro zone should grow 3.9% and 2.7% in 2021 and 2022, respectively. A decent, but incomplete recovery with weak inflation ", the bank's analysts point out.

For the euro zone, these experts maintain a "very binary perspective", quite the opposite of what they predict for the US economy. As they point out, GDP will go there "from a crawl to a sprint". "We think that 2021 will be a year of transition, returning to services from goods, to private from public and to face-to-face from virtual", they say. "The scars of the coronavirus will remain," but the economy will grow 4.5% in 2021.

And what to expect from China? Well, the next exercise will be the year in which the Asian giant's economy "will complete normalization". "We expect economic activities to normalize even more and we maintain our GDP growth forecast of 8.5% for 2021. Investment is likely to remain strong, along with a full return in consumption," predicts BofA.

WHAT DOES EUROPE NEED TO GROW MORE?

The US bank believes that Europe needs "exceed some milestones" before recovery can start to take off in earnest. "The new restrictions are working, but the contagion count is being corrected very slowly," says BofA in reference to the incessant increase in coronavirus cases that the countries of the Old Continent continue to report.

The most immediate problem is blockade of Hungary and Poland recovery funds, but you can't forget the Brexit. "Once we pass these milestones (successfully, in our assumption), we will feel calmer," say analysts at BofA, who predict that "inflation will continue to be bad, the euro zone will continue to need more fiscal support and macro imbalances. they will persist, "although" decent growth and the ECB may help sweep some concerns under the rug for a while. "

Above all because the beginning of the new year will be "rocky". "Once again, we are in the gap" because many countries continue to fight against the Covid-19 outbreaks, says the bank, which assures that "a combination of fiscal stimulus and a wide distribution of vaccines should boost growth by mid-year. ".

"We are not out of the woods yet"insists the US entity, which sees the short-term outlook "weak and uncertain." However, he states, "once we get through that gorge, we expect multiple vaccine deployment to drive global growth, particularly in developed market economies with the biggest Covid containment problems, but with the best access to the vaccines ".

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