While Europe’s economic recovery in the wake of COVID has been “halting and uneven,” there are promising signs on the horizon, the International Monetary Fund (IMF) said in a blog post on Wednesday (April 14).
The IMF wrote that its projected European economy will rebound by 4.5 percent this year. If vaccines become widely available throughout 2021 and 2022, growth next year is expected to hit 3.9 percent, bringing output in Europe to its pre-COVID level, but not to the place it was expected to reach before the outbreak.
“Virus mutations and vaccination delays are the prime concern at this time,” the IMF wrote. “The biggest worry over the medium term is economic scarring — output that never recovers because people who lost jobs during the pandemic cannot find new ones. This can happen because gaps witnessed in education and worker training are never recovered, deferred productive investment remains shelved or resources remain in declining sectors rather than shifting to expanding ones.”
This makes an increase in vaccine production crucial for Europe and the rest of the planet, as Europe is “a hub for vaccine production and exports,” the IMF noted. These efforts should be paired with faster vaccine distribution.
These remarks follow a report by the European Commission in January calling for “a renewed and united determination for Europe to act together” on boosting vaccines and related supplies, conducting more testing and sequencing in an attempt to crack down on new variations of the virus, and showing “international leadership and solidarity with its partners.”
For the moment, Europe is in the midst of a “V-shaped” recovery, with industrial production rising and the service sector struggling. This is borne out in places like Germany. As PYMNTS reported in March, that country saw its retail sales fall by 4.5 percent due to tight health restrictions.
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