Tuesday, 20 Apr 2021

Eurozone crisis: EU’s catastrophic vaccine rollout ‘endangering resurgence of Europe’

Merkel warned by expert: Recovery plan ‘won’t fix’ Eurozone

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Capital outflows from large European equity funds to the USA occurred for the third week in a row, analysts have warned. The move, which favours US President Joe Biden’s coronavirus stimulus over the bloc’s Recovery Fund, comes as a direct consequence of Brussels’ failure to speed up its vaccination strategy.

Seema Shah, chief strategist at Principal Global Investors Ltd., which manages a $544 billion fund said: “Europeans should speed up the vaccination rate as soon as they can if they want to get the situation under control.”

Peter Vanden Houte, chief economist of the major bank ING in Brussels added: “Even if it sounds very pessimistic, I can only say: The current vaccination rate is endangering the resurgence of the European economies.”

According to the Bloomberg Corona vaccination tracker, the EU has so far used eight vaccination doses per 100 inhabitants.

In the UK it is 33 doses per 100 people and in the US 25 doses per 100.

The slow pace of vaccination leads to a prolongation of the lockdown, which, according to the Ifo Institute, directly affects around 16 percent of the national economy in Germany and has a negative impact on all domestic sales through reduced mass purchasing power.

According to the Ifo Institute, every week in lockdown means around 1.5 billion euros in lost economic power for Germany.

The retail, entertainment, tourism and airline industries are particularly hard hit by the slowdown.

The Organisation for Economic Cooperation and Development also said on Tuesday that the global economic outlook has brightened as COVID-19 vaccine rollouts speed up in some countries and the United States launches a vast new stimulus package.

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The world economy is set to rebound this year with 5.6 percent growth and expand 4.0 percent next year, the warned.

But significant risks loom over the improved outlook, notably in the form of how fast authorities get vaccine shots to people, how soon restrictions are lifted and whether new variants of the coronavirus are kept in check.

OECD chief economist Laurence Boone told an online news conference: “Not vaccinating fast enough risks undermining the fiscal stimulus that has been put in place.”

Singling out Europe for its slow rollout, she said government money injected into the economy risked ending up in consumers’ savings if they cannot soon return to more normal lives.

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Global gross domestic product was seen returning to pre-pandemic levels by the middle of this year, albeit with large divergences between countries.

She said: “The pace of vaccinations is not fast enough to consolidate the recovery, we need to go much faster and we need to do much better.”

The warnings come as Johnson & Johnson has told the European Union it is facing supply issues that may complicate plans to deliver 55 million doses of its COVID-19 vaccine to the bloc in the second quarter of the year.

Any delay would be a further blow to EU’s vaccination plans, which have been hampered by bumpy supplies from other vaccine makers and a slow rollout of shots in many member states.

J&J told the EU last week that issues with the supply of vaccine ingredients and equipment meant it was “under stress” to meet the goal of delivering 55 million doses by the end of June, the EU official – who is directly involved in confidential talks with the US company – told Reuters on condition of anonymity.

The official added the company had said it was not impossible to meet the goal, but that it showed caution.

J&J’s vaccine, which requires only one dose for protection, is expected to be approved on March 11 for use in the EU by the bloc’s regulator. EU officials have said deliveries could start in April.

The company has committed to deliver 200 million doses of its vaccine to the bloc this year.

Additional reporting by Monika Pallenberg

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