The weekly tracker of economic activity compiled by the OECD rose above the comparable 2019 level at the beginning of September in most of the eurozone countries on a 4-week rolling basis. It was particularly high in Italy and Belgium, but some economists predict that the eurozone’s recovery may slow down in the coming months, due to various factors. Overall, it is still lagging behind the U.S. and China, where economic activity has already reached pre-pandemic levels.
As noted in an article in the Financial Times, an economist is predicting that the third quarter of 2021 will show a further increase in the eurozone’s consumption rate, which accounted for 1.9 percentage points of its 2.2 percent growth in the second quarter. With Covid-19 infections declining thanks to widespread vaccination, people have been travelling, eating out, shopping and doing other things outside of their homes more frequently. In fact, the use of airports and domestic transportation have reached their highest levels since the start of the pandemic, according to Google and Apple, although international travel is still about 30 percent below pre-pandemic levels. Meanwhile, job vacancies have continued to rise as compared to February 2020, led by Italy and Germany.
However, Christine Lagarde, president of the European Central Bank, warned earlier this month that the eurozone was “not out of the woods,” citing growing uncertainties. An economist from Berenberg quoted by the FT, Kallum Pickering, points to concerns about the Delta variant of Covid-19, worsening supply chain shortages, rising energy prices and general inflation, plus a slowdown in China’s economic growth.
