The recovery of the European economic recovery is accompanied by multiple risks. Due to the impact of the new crown pneumonia epidemic, the European economy fell into recession in the first half of the year. Recently, the overall recovery of the European economy has shown momentum, but the economic performance is still mixed, accompanied by risks.

♦  The recovery momentum is showing

According to data released by Eurostat on the 14th, the gross domestic product (GDP) of the European Union and the Eurozone in the second quarter shrank by 11.7% and 12.1% respectively from the previous quarter, and the single-quarter shrinkage was the highest since the EU started relevant statistics in 1995. Germany, France, Italy, Spain and other 10 countries experienced double-digit economic contraction in the second quarter. Among them, Spain’s economy contracted the most month-on-month, reaching 18.5%. Lithuania, the smallest drop, also fell 5.1% from the previous month. The month-on-month declines of the European integration “engines” France and Germany reached 13.8% and 10.1% respectively.

The bleak economic data in the second quarter is expected. However, the data also shows that with the gradual recovery of production and life, the recovery of the European economy has strengthened.

The Eurozone Economic Sentiment Index released by the European Commission rose significantly in July, mainly due to the substantial increase in confidence in the industrial, service and retail industries, and the stability of consumer confidence.

Analysts believe that thanks to the effectiveness of the epidemic prevention and control measures and the large amount of money printed by the European Central Bank, the European Union and its member states’ governments provided timely “blood transfusions” to the real sector. The European economy began to rebound after “bottoming” in April. Since the beginning of the month, the economic recovery has strengthened.

♦  Eurozone liquidity is not optimistic

In early June, the European Central Bank decided to further expand the scale of quantitative easing in an effort to ensure liquidity in the euro area and support economic recovery.

De Jindos emphasized that the resilience of the financial system is crucial to the recovery of the European economy. The most important thing is to ensure that the financial market is functioning well, and that corporate and household loans are guaranteed.

Wanbach pointed out that the banking industry and insurance companies still have poor earnings expectations for the next six months, which is worrying.

♦  The European Central Bank’s easing is hard to increase

Although various economies have launched large-scale economic stimulus plans, the biggest feature of the world economy under the epidemic is still “uncertainty”, and this is also true for Europe. Analysts said that countries are facing tremendous pressure to resume work and production. Only under the premise of preventing and controlling the epidemic can it be possible to turn “uncertainty” into “certainty” and promote sustained and stable economic recovery.

The European Central Bank pointed out that economic output in the euro zone will not be able to return to pre-epidemic levels at the end of 2022 at the earliest, and the recovery trajectory is highly uncertain.