Eurozone | Slow vaccination pushes return to normal to late 2021

We expect eurozone GDP to contract in Q1. European countries have so far faltered in implementing their vaccination programmes, slowing their effort to control the pandemic and allow any meaningful economic recovery to take off. We estimate that inoculations will remain limited over Q1, forcing governments to maintain strict containment measures as infection rates stay high.

What you will learn from this report:

  • Vaccinations should accelerate from the spring, paving the way for relaxation of most restrictions and ushering in a growth rebound, peaking in Q3. We expect the EU to hit its summer target of vaccinating 70% of the adult population in early August.
  • Several risks surround our baseline. On the downside, more supply reductions, logistical issues, and a slower uptake due prevailing antivax sentiment in some countries could prolong vaccination progress. On the upside, increases in production capacity, improvements in manufacturing processes, and more efficient inoculation programmes could accelerate the pace. Overall, we see risks as broadly balanced around our baseline.
  • We see additional uncertainties regarding the exit from the current restrictions. A premature relaxation of containment measures could see a resurgence in infections. And a singular focus on only vaccines as determining the economic outlook is misleading because cautious consumers waiting to be vaccinated before resuming their normal spending patterns could delay the recovery.

Topics: Europe, Eurozone, Markets, Coronavirus, GDP, Recovery, Coronavirus vaccine

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