Does the fifth wave threaten economic recovery?

The fifth wave of Covid-19 poses a threat of economic slowdown in the euro area. However, some indicators expect their impact to be limited.

Once again the epicenter of the Covid-19 epidemic, Europe has been facing new pollution over the course of several weeks. Introduced in Austria, Slovakia and the Netherlands to curb dynamic, strict or partial containment. In Germany, where the magnitude of the fifth wave is equally concerned, Chancellor Angela Merkel called for “additional restrictions” and insisted that “every day is important.”

France is not there yet. However, the government still decided to tighten the screws in the face of a surge in incidents. On Thursday, Health Minister Olivier Véran announced that the validity of the Health Pass will be conditioned on a booster vaccination against Covid-19 from January 15. We hope this is sufficient to protect the population and avoid curfew and drastic measures such as confinement.

What is the impact?

After the 21-month health crisis, the unprecedented situation could put a brake on economic recovery, which was far stronger than previously expected within the Old World, according to some experts. I have.Quoted by Oxford economist echo In addition to the specific restrictions imposed by Lander, the introduction of a health pass in Germany could impact consumption and lose 0.8 points of national GDP in the fourth quarter, assuming the measures last for a month. I presume that there is.

According to Oxford Economics, the continent’s largest economic failure could have a “0.25% negative impact on Eurozone GDP.” To make matters worse, the eurozone will be introduced with strict captivity in the nine European countries most exposed to the fifth wave (Austria, Germany, Belgium, Finland, Ireland, Greece, the Netherlands, Slovakia and Slovenia). GDP is reduced from 0.7. In the last three months of this year, I got 0.8 points.

Finally, the black scenario, which also envisions new restrictions in Southern European countries, will reduce European GDP in the fourth quarter after recording + 2.2% in the third quarter. In a public intervention, Bank of Italy Governor Inhazio Bisco said, “Uncertainty remains high, largely reflecting health as a major concern again.”

“We haven’t been robbed too much.”

The realization of such a scenario will undoubtedly impose a penalty on France and the countries of Southern Europe. Although these countries are more dependent on services than northern countries, recent experience has shown that health restrictions place particular emphasis on tertiary countries. But you shouldn’t shoot the ambulance too fast. The fifth wave is not comparable to the previous one and there are several reasons for hope.

First, France has been shining in the dynamism of activity in recent months. Unlike the original forecast for mid-2022, France’s GDP returned to pre-crisis levels in the third quarter. Growth overhangs reach 6.6%. So if France’s GDP is stable in the fourth quarter, 2021 growth will remain at 6.6%.

Other indicators that make it possible to capture the heartbeat of the French economy are just as reassuring. Employment exceeded 2019 levels, household morale remained stable in November, and the business environment continued to improve in the same month (+2 points compared to October). ).

It should also be remembered that each new epidemic wave has less serious economic impact than the previous wave, and that confinement is adapted by drawing lessons from past experience. And the “big difference” from this fifth wave is “I have a vaccine, I’m starting to get treatment (…). We haven’t been robbed,” said Professor of Science and Economics in Paris. Describes Benjamin Koreat, a BFM business that is 13. .. Xavier Timbo, chief director of the French Institute of Economic Research (OFCE), is even more optimistic. “I think we can get through this fifth wave pretty well. It will have an impact, but it will be far from the disasters we saw in 2020 and 2021. We need to live with a pandemic. there is.

“The virus has become a watch master again.”

Therefore, while a slight slowdown in Q4 activity cannot be ruled out, a new economic collapse is not the most likely scenario at this stage. Despite all, he calls attention in the face of the slightest visibility we have: “The only subtlety is that the virus has become the master of the watch again. Doesn’t really know this fifth strength, the level of diffusion, this fifth wave, no one expected it, so you have to remain indecisive. “

Nevertheless, it has a direct negative effect. “The impact of the virus recurrence is a focus on savings,” emphasizes Benjamin Koreat. With the emergence of new variants in South Africa, the uncertainties surrounding the fifth wave put an end to all hopes that households will utilize their short-term savings. It should be around 200 billion euros by the end of the year. This is the reason why “we have to help unfreeze this savings, it’s not a healthy situation”, yet Benjamin Koreat points out the idea of ​​a collective guarantee to encourage French people to invest. Suggests.