EUROPE’S ECONOMY GREW FAST: WILL IT SLOW DOWN?

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The Eurozone’s economy grew at 2 percent in this year’s second quarter after contracting in the first, outpacing both China and the U.S. and passing the 1.5 percent forecast by economists Reuters had polled.

The U.S. GDP edged up 1.6 percent for the period, China’s 1.3 percent, the countries reported earlier.

Lockdowns were lifted, vaccination campaigns were taking hold, and consumer spending returned to pre-2020 levels, the Financial Times reported.

The region’s inflation is rising even faster, notching 2.2 percent in July, up from 1.9 percent in June and the speediest rise since October 2018, the FT said.

The European Central Bank has set 2 percent as its long-term inflation target. (See “ECB PLEDGES TO KEEP RATES LOWER LONGER,” Trends Journal, 27 July 2021.)

The bloc’s unemployment rate dropped from 8 percent to 7.7, with the number of jobless shrinking by 423,000 to 12.5 million.

France, Germany, Italy, and Spain all expanded their GDPs, although Germany’s 1.5-percent growth fell short of the 2 percent economists had forecast.

Materials shortages, particularly in computer chips, were to blame for Germany’s shortfall, analysts said; Germany’s economy depends more on manufacturing than other European countries’ do.

Analysts say Europe’s economy should continue to expand briskly this year, perhaps even surpassing the U.S.’ s and China’s for the entire year, the FT noted.

“Vaccination rates are significant already and increasing rapidly,” Jean Pisani-Ferry, a fellow at the Peterson Institute for International Economics, said in an FT interview.

“Some renewed restrictions are likely, but I do not think governments will go for lockdowns as long as there is no risk for the hospital system to be overwhelmed,” he added.

China’s economy returned to its pre-crisis volume last year and the U.S.’s in this year’s second quarter; Europe’s is still about 3 percent below its 2019 level. 

TREND FORECAST:  We disagree with the Peterson Institute analysis. As thoroughly detailed in this Trends Journal, the high vaccination rate is not stopping the vaccinated from getting the virus. Secondly, the “must get vaxxed” and other mandates being imposed will negatively impact GDP growth throughout Europe... and the world. 

1 Comment
  1. Craig Bradley 1 year ago

    GULAGS OR GOULASH ?

    Negative real interest rates on European Region Sovereign Debt since 2014 and continued Covid restrictions limit any upside to Europe as it implements “The Great Reset”, from capitalism to socialism, sic. communism. Consequently, money is fleeing Europe and coming to North America, but also returning to China and Russia, as well. Europe will be the first region globally to collapse. Later-on, in say five more years, it may be our turn to fall at-last. The Left is moving fast around the world to shut-down whole economies and end Democracy as we know it, replacing it with Socialism and centralized government management and control. No return to the “good old days”, but perhaps a return to the gulags of Russia for those who wish to be non-compliant.

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