Taps Coogan – July 17th, 2020
Enjoy The Sounding Line? Click here to subscribe
Daniel Lacalle, Chief Economist at Tressis Gestión and author of several books including ‘Escape from the Central Bank Trap‘ and ‘Freedom or Equality,’ recently spoke with NTD Business about his concern that the Eurozone economy is headed for a uniquely poor economic recovery post Covid.
Mr. Lacalle warns that the process of getting back to 2019 GDP levels in the Eurozone will be a “very very long and difficult process,” noting that while the Eurozone’s subsidized jobless schemes are keeping nearly 40 million people out of the unemployment statistics, bloated government deficits, the lack of a large tech sector, high taxes, and lower baseline growth loom over any recovery for highly indebted Eurozone nations.
He also warns of rising food prices putting pressure on consumers just as they try to recover from Covid:
“Actually, there is a certain level of bounce in terms of consumption. You see for example that in Southern European economies the return of the hospitality sector is quite strong. Still, it is very much below the levels it was in February of this year. So, I think it’s quite difficult to see households coming back to the level of consumption that existed in February, January of this year, let along 2019, because of the high levels of unemployment, the high levels of uncertainty about an outbreak, and also because of the increase in food prices, which has actually reduced significantly the ability of people to increase their expenditures in other areas.”
Keep in mind that prior to Covid, tourism represented about 20% of the Greek and Portuguese economies and nearly 15% of the Spanish, Austrian, and Italian economies, and that those countries struggled to achieve positive economic growth during the ‘good times.’
Would you like to be notified when we publish a new article on The Sounding Line? Click here to subscribe for free.