Covid 19: how the world is learning to manage the recovery!
Now that the whole world is starting to recover from the Covid 19 pandemic, the main question concerns above all, the reaction of the markets of all nations.
According to various estimates, the success of vaccinations and the support of fiscal policies have triggered a post-pandemic rebound of the economy, which will dominate the two-year period 2021-22.
An inflationary flare is underway which is expected to be transitory, but which at the same time will see a rapid recovery of pre-crisis levels which could lead next year to a tightening of monetary policy, especially in the United States and Europe.
Specifically, by carrying out an accurate analysis on each of the states we can see that:
In the United States today there are excess demand with rising inflation; expansion is solid and expected growth is 7.5% in 2021 and 4.3% in 2022.
In the Euro Area, on the other hand, there will be a delay, despite this, however, the recovery began in the spring and will accelerate this summer, and will then consolidate in the following quarters thanks to the fiscal policy which should remain expansive.
For Germany, there will be a return to pre Covid levels already in the second half of 2021. Although growth will be less strong than average with an estimate of 3.5%, a significant recovery is expected in 2022 with the achievement of equal levels to 4.9%.
France can also count on a recovery in the second half of the year. Therefore, no problem for the stagnant economy during the second quarter of the year, due to the delay in the implementation of the pandemic containment measures. The confidence indices combined with the excellent results of the vaccination campaign, see a strong return to growth in the third quarter with a contained expansion in the fourth. The French economy is expected to return to pre-pandemic levels in the first half of 2022.
For Italy, things do not seem to be going badly but perhaps worse than in other fellow nations. Growth is up compared to the outbreak of Covid-19, the economy will remain almost 5% lower than in 2019, but it is expected to recover by 2022. Furthermore, a positive aspect is that growth could remain above potential until 2026, thanks to the effect of both the post pandemic rebound and the National Recovery and Resilience Plan.
Spain takes off thanks to a growth that exceeds the average of the Euro Area in the period 2021-2022. After being the hardest hit by the pandemic crisis, it should now return to growth starting in the spring quarter and thanks to progress in the health sector and the relaxation of restrictions. An acceleration of the recovery will be mainly due to the summer season and the España Puede plan, with growth ranging from 5.6% in 2021 to 6.4% in 2022, and a return to pre Covid levels towards the second half of next year.
For the recovery of the Netherlands we connect to the context of political instability: in fact, the attention is entirely directed to the formation of a probable Rutte IV government despite the Prime Minister’s decline in popularity. Here, too, GDP growth of 2.9% is expected in 2021 and an acceleration to 3.5% in 2022. All this despite the worsening of public finances which, although substantial, does not cause much concern.
Asia and the problems arising from the Covid 19 pandemic
Bad news for Japan, which sees the pandemic dominate the entire economic scenario. With the two waves of infections of 2021, GDP was constantly decreasing for the entire duration of the first half of the year. The slowness of the vaccination campaign has not helped, and keeps the risks lower and lower, with growth driven by the foreign channel and the fluctuating trend in private domestic demand.
In China, economic activity should return to accelerate around the second quarter, given that in the first quarter the continuous measures to contain the outbreaks did not help. However, the expected slowdown in investments induced above all by the moderation of credit should be offset only in part by a growth in private consumption and a positive contribution from the foreign channel.
Finally, unfortunately, just at the moment when India was going through a moment of consolidation of the recovery and improvement of confidence, it was hit by the second wave of infections that hit the country heavily. The resolution of the pandemic situation, however, is already in progress and this means that the improvement and the impact on economic activity, promises to be significant but is to be evaluated towards the 2nd half of 2021, remains however lower than that of the first national lockdown.
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