The second wave of restrictions condemns the growth in 2021

The advance of the health crisis was warned back in May, during the de-escalation period. Now, in the middle of November, Europe is shielding itself against the second wave of infections with more restrictions on mobility, shops. It has even imposed strict confinements such as the one that occurred in March to mitigate the impact on national health systems and its collapse. 

These measures threaten to hinder the already burdened projections for growth and the economic recovery forecast for next year. Some economists think that with the new wave of restrictions, a second lockdown would cause the leading economies not to recover until 2023. In this way, the restrictions would delay their goal to reach the pre-crisis levels before March. It implies that the damages of the pandemic are even more profound.

According to the IMF, the set of the most advanced economies on the globe will suffer a decline of 5.8% of GDP this year. Then they will grow in 2021 by 3.9%. Beyond that, the Fund estimates an advance of 4.4% in 2022, 3.3% in 2023, 2.7% in 2024, and 1.4% in 2025.

A sample of what may come next year can be drawn from the behavior of the international economy in the fourth quarter of the year. It is an important indicator because it conditions the growth dynamics of the first and second quarters of next year. 

The de-escalation period was translated into a total opening of all economies in the whole of Europe. This has contributed to the resurgence of the infected cases with records of infections throughout the continent.

Strategies diverge in different European countries

One of the most severe measures for the second wave is already applied in France, with total confinement of the population for a month. Germany has put restrictions on all restaurants and shops and other establishments. Italy has stopped all leisure activities including cinemas and theatres and limited the hours of shops to 6:00 p.m. Spain keeps mobility restrictions and the so-called curfew. The United Kingdom is in the same line as the measure adopted in France. It will apply severe confinement to the population during the next month.

As economists explain, the expected effects of these measures on the economy will be adverse and will jeopardize the growth forecast for next year. The critical factor will be the performance of GDP in the last months of the year.