The European economy — buoyed by the United States

The first quarter has seen much more doubt surrounding the economy in Europe than America. The latest wave of the pandemic is severely impacting the largest countries in the area. The situation will improve though, with the acceleration of vaccination drives and the knock-on effect of increased growth in the United States.

Key points

• Key points:
• In addition to the higher volume of cases, there have been numerous controversies surrounding the management of the pandemic. The latest surrounds the suspension, albeit temporary, of the AstraZeneca vaccine, the threat of export bans on it and the lack of clarity regarding new restrictions in Germany.
• In the United States, the Democrat-controlled White House and Congress have pushed through a massive USD 1.9 trillion fiscal stimulus package, on top of previous stimuli, and are beginning to negotiate an infrastructure program that will bring additional investment.
• Moreover, its vaccination rate is double that of Europe, while the Federal Reserve has remained calm and contained fears of a possible acceleration in inflation and interest-rate hikes.
• Even so, the outlook for Europe should improve. The delays with vaccinations are relatively small and restrictions on mobility have been tightened but confidence indicators are not, for the moment, looking like they are going to fall in the second quarter.
• One factor that is perhaps being underestimated is the acceleration of growth in the United States, which has been much stronger than anticipated a few months ago and which will have a knock-on effect on the rest of the world, including the European economy.

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