Eurozone crisis: Bloc crashing into double-dip recession as bungled jabs rollout hits hard

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The European Union’s 19-nation single currency bloc is expected to shrink having been hit by continuous lockdowns over recent months. Performance data for the first quarter is expected to show its economy contracted by around 0.8 percent before any sign of recovery. It shows the EU’s bungled vaccines rollout and a fresh wave of coronavirus infections have significantly held back its economy.

In a separate forecast, German insurance giant Allianz predicted Eurozone GDP to slump 0.5 percent in the first three months of the year compared to the previous quarter.

This would mean a double-dip recession for the single currency bloc after a 0.7 percent decline was recorded in the fourth quarter of last year.

Top economist Katharina Utermohl, of Allianz, said: “It is look like a double-dip recession in the first quarter.”

This means Europe’s economy is lagging behind in the global race to recovery after coronavirus brought the world to its knees just over a year ago.

On Thursday, the US reported quarterly growth of 1.6 percent and China announced a 0.6 percent growth two weeks ago.

Ms Utermohl expressed hope Europe can follow suit with some countries starting to show signs of improvements in their economic performances.

“We have pencilled in an economic resurrection for the second quarter,” she told the FT.

“The consumer is in the starting blocks and just waiting for the starting gun. Then we’ll see a super boom.”

The economist predicted a growth of 1.4 percent for the Eurozone in the second quarter of the year.

But European Central Bank chief economist Philip Lane warned the single currency bloc would need time to make a full recovery.

He said the euro-area is at a turning point after months of misery with the EU’s vaccine rollout finally starting to pick up pace.

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Mr Lane claimed this should allow for a “good recovery”, in an interview with Sweden’s Dagens Industri.

He said: “There will be a rebound, but I should say, of course, this is all in the context of the pandemic being a huge negative shock.

“The fact we’re rebounding from the worst of it does not mean there’s a full recovery.”

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Yesterday the European Commission published its business sentiment index with an increase to 110.3, the highest reading since 2018.

“We are very much I think at an inflection point,” Mr Lane said.

“We do see a good recovery throughout the rest of the year.”

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