Eurozone – 2020-2021 Macroeconomic Outlook: resilience mapping to prevent the worst-case scenario

Eurozone – 2020-2021 Macroeconomic Outlook
  • Anatomy of an imperfect "V"
  • Sketching out a recovery, beyond the mechanical rebound
  • The true cost of the crisis is not yet visible
  • Why this time may be different
  • Forecasts

In summary

During the summer, the economy moved in two directions: one very positive, the other less so. Economic data confirm that the end of the second quarter did feature a very strong rebound in activity and confidence. On the other hand, the epidemic's global trend dispelled any scenario of the virus quickly abating. The risk of a second wave of the virus, which we predict will be controlled by targeted, localised restrictions, as well as the risk of an uneven recovery are also casting a high degree of uncertainty over our growth scenario.

Eurozone – 2020-2021 Macroeconomic Outlook

On the economic policy front, some reassuring certainties are emerging. With the European Recovery Plan, the zone's most indebted countries can count on large, highly concessional transfers and loans guaranteeing positive fiscal stimulus beyond the forecast horizon. With the Fed's change in strategy, any premature reversal of the monetary policy stance in advanced economies is off the table. Yet underneath the authorities' "Band-Aids", the wounds from the crisis are becoming visible, and they are only the first. With profits eroding and activity still much reduced in certain sectors, we will inevitably see more and more companies go bankrupt, with higher unemployment as temporary support measures (tax relief and deferrals and short-time work) are removed.