Eye of the Storm
Europe is increasingly isolated as it finds itself at the epicentre. Unfortunately,
it does not have the tools to cope with a crisis that has no parallels in history.
Millions of people have been affected by the coronavirus in Europe and around the world. But the actual damage caused by the pandemic – from the perspective of healthcare, economy and society – is still unknown, and will become clear with the passage of time.
The European Union is experiencing an unprecedented slowdown in the bloc’s economic output which is estimated to be around 7 percent. The consequent recession will be a ‘historic’ one, the likes of which have never been seen by the continent’s prosperous population.
The pandemic has affected spending, investment, supply chains, and industrial output. It has also hit the white collar workforce because of dwindling demand for goods and services. The unemployment rate around the continent is expected to rise by 2 percent.
The magnitude of the recession, and the pace of recovery – if it happens – cannot be predicted at this moment. However, one of the main factors that will contribute towards Europe’s economic revival in the coming days will be the ability of its governments to lift lockdowns in a swift and efficient manner. It will also hinge on each country’s available financial resources, and the capacity of its hardly-hit sectors to spring back into action.
The virus has hit the entire continent with variable degrees of severity in each country. Italy, Spain and Greece are the hardest-hit while Luxembourg, Austria and Malta have been spared the scathing effects of the pandemic.
Countries severely hit by the pandemic will report growing budget deficits and increasing public debt. This will affect the economic outlook of the entire bloc.
Europe’s economic shock is further aggravated by the deteriorating situation in its immediate proximity. Its neighbours to the east and south are inching towards total disaster. They are likely to upset Europe’s own prospects of a swift economic recovery.
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