Europe | Elections and the economy

Summary

The European economy has begun the year immersed in a third wave of the pandemic which, although it is beginning to recede, will slow the recovery expected for this year.

Key points

• Key points:
• Last week the GDP growth in the Eurozone for 4Q20 was published, showing a 0.7% contraction q/q.
• Still, the German and Spanish economies have remained at positive rates in the last quarter, while France and Italy have fallen less than expected.
• But January's purchasing managers' index (PMI) indicators were negative, signaling a further contraction of the services sector as a result of restrictions.
• In addition, the management of vaccine supply in Europe suggests that there may be some delay in normalizing activity by the middle of the year, which is the assumption used in most forecasts.
• Beyond the short term, upcoming elections in some of the larger member states could have important long-term consequences.

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