Covid-hit eurozone in better shape than once feared 

Covid-hit eurozone in better shape than once feared 

Christine Lagarde, President of the European Central Bank which has stimulated the eurozone economy through the pandemic.

Europe appears to have weathered a pandemic-induced recession better than many feared, a slew of indicators has suggested, but prospects for a second wave of infections and a hard Brexit are once again raising talk of more stimulus.

Having shrunk by over a tenth last quarter, the eurozone economy is quickly regaining strength on the back of relatively resilient consumption, supported by job subsidy schemes, tax cuts, and lavish stimulus from the ECB.

Indeed, consumer confidence in the 19 countries sharing the euro rose this month, the European Commission said, a reading below its long-term trend but easily beating market expectations.

Adding to the positive news, the Ifo Institute upgraded its forecast for Germany, expecting GDP in the eurozone’s biggest economy to shrink 5.2% this year, a big improvement on its last projection for a 6.7% drop or the Bundesbank’s 7.1% forecast.

The figures suggest that unprecedented fiscal and monetary support have insulated the eurozone from an unprecedented recession and households began to spend once again as most restrictions were lifted during the summer months.

Unemployment in the region has barely risen compared to some other major economies and, at 7.9%, has still not moved far from the more than 10-year low of 7.2% hit earlier this year. Reuters

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