Europe is falling back into COVID-19’s grip as the virus delivers a harsh rebuke in country after country whose residents thought they’d beaten it, The New York Times reported.
The publication’s assessment was based in part on a speech by European Central Bank Chief Economist Philip R. Lane delivered digitally to a meeting of the U.S. National Association for Business Economics.
“We expect about half of the cumulative decline in output in the first half of the year to have been reversed during the third quarter,” he said, according to a transcript posted on the European Central Bank’s website. “Compared with the trough, this initial recovery phase is visible across a wide range of economic indicators.”
“[T]he euro area economy is still operating far below its pre-pandemic level,” he added. “While this in part can be attributed to ongoing supply-side interruptions, the speed of the recovery is also held back by a lack of buoyancy in demand conditions. Meanwhile, the resurgence in infection rates — and the associated public health measures — is posing renewed challenges, especially for those sectors most affected by social distancing.”
Momentum among services companies has been slowing since August, he said, and business services began contracting in September.
Households and businesses are saving money rather than spending it due to concern about the future, he added.
Economic output by the end of 2020 is expected to wind up about 5.2 percent below the same figure at the end of 2019, he said, and “economic activity is foreseen to return to pre-pandemic levels only towards the end of 2022.”
The New York Times also noted that consultancy Oxford Economics concluded recently that a jump in economic activity in September largely was due to the reopening of factories but that any continued benefit would require that consumers buy the goods produced in those factories.