The eurozone’s economy is diverging sharply from the U.S. and China, as stubbornly high coronavirus infections, extensive Covid-19 restrictions and a painfully slow vaccine rollout delay Europe’s recovery from last year’s historic economic downturn.
Fresh data Tuesday highlighted an economic gap between the eurozone and the U.S. and China that is likely to widen this year, given that the U.S. is proceeding more quickly than the European Union in rolling out vaccines and China remains largely free of the virus.
Since the start of the pandemic, European policy makers have sought to balance saving lives and supporting businesses, but have generally pursued more draconian restrictions to stop the virus’s spread than has the U.S. Nonetheless, the death toll in Europe is approaching that of U.S., while its economic performance—already lagging behind the U.S. before the pandemic—has been much worse than other advanced economies.
Now, a sluggish rollout of vaccines, the threat of highly contagious new variants of the virus and the possibility of weeks or months of continued restrictions bode ill for the near term and could delay a recovery. EU countries have administered vaccines to less than 3% of their populations compared with 9% in the U.S. and 14% in the U.K., according to OurWorldInData.
Many economists expect the eurozone to re-enter recession in the coming months. “The eurozone will be the last major economy to return to pre-pandemic levels and will suffer continued substantial output gaps for at least the next two years,” said Erik Nielsen, chief economist at UniCredit.
The International Monetary Fund expects the eurozone economy to end this year 3.3 percentage points smaller than it was at the start of 2020, while the U.S. economy will be 1.5% larger.