Europe’s Hope Of “V” Shaped Economic Recovery Fading With Resurgence Of Pandemic

With the number of daily coronavirus infections continuing to rise rapidly, it is likely that more restrictions on public life in the coming days will be imposed by European countries, according to analysts.

“Expect lots more restrictions over the days and weeks ahead, especially in Europe,” Deutsche Bank analysts said in a note Monday. “The fact that the virus is already spreading quite rapidly is a big worry.”

According to a compilation by Reuters 10,569 new cases were reported in France on Sunday which was lower than the more than 13,000 new cases reported the day before. On the other hand, more than 4,000 cases were reported in the UK on Sunday. Almost 1,000 new cases were reported by Italy while 1,345 new cases were reported by Germany on Sunday.

The rising cases of coronavirus infection in countries like France, Austria and the Netherlands were “worrying”, said German Health Minister Jens Spahn on Monday, and added that sooner or later, infection from those countries would spread to Germany. The trends of infection in countries like Spain showed “that are likely out of control”, he added.

Last week, the World Health Organisation warned about a “very serious situation” unfolding in the region, referring to the rising cases of novel coronavirus infection in Europe. The WHO described the resurgence of the pandemic in the region as a “wake up call.” 

Some governments have already imposed restrictions locally to stop the spread of the infection. For example, lockdown has been imposed in parts of northern England and in areas of Spain’s capital Madrid.

However this time around, the fatality rate because of the infections is lower so far compared to the first wave of the pandemic. Deutsche Bank analysts led by Jim Reid noted that it is being hoped that the death rate in the region will not be as high as was witnessed during the first outbreak in spring.

But the hopes of the region of an economic rebound and a “V” shaped economic recovery looks increasingly unlikely because of the resurgence.

“It doesn’t feel like fatalities are going to be as big as an issue as they were in the first wave but it really is hard to understand what the strategies of (European) governments are at the moment,” the analysts noted.

“They pretty much all don’t want a further wide scale lockdown but they also don’t want the virus to spread. Its not going to be easy to solve for both and as such it’s going to be a pretty difficult few months ahead if September is seeing numbers as high as they are already.”

European markets have been impacted by the new coronavirus developments in the region. Ther was a 2 per cent drop in early trade on Monday in the pan-European Stoxx 600 index.

Hopes of an economic bounceback were fading fast, agreed Rabobank strategists.

“With Coronavirus cases having surpassed the 31 million mark and almost 1 million deaths globally, the possibility that ‘second waves’ or indeed, first waves that were never actually brought under control will continue to weigh on the economic and policy outlook is all but certain, while earlier optimistic hopes for a ‘V’ (or perhaps even ‘W’) shaped recovery will continue to fade,” they said in a note Monday.

(Adapted from CNBC.com)



Categories: Economy & Finance, HR & Organization, Regulations & Legal, Strategy, Sustainability

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