Delta Strain Poses Threat to Europe’s Summer

Just when Europe was getting its hopes up for a low-risk summer when it comes to the Coronavirus and lockdown restrictions, the pandemic threw the region a curveball in the form of the new Delta Strain.

The strain has taken significant hold in Spain, Portugal, and France so far, particularly among younger people, causing fears that restrictions will need to be implemented again which could put a huge damper on Europe’s hopes for a summer of sun and freedom. With fears rising about the future of Europe’s tourism,

Cloudy with a chance of recovery

The Delta strain is highly transmissible and was first identified in India back in April and May. The variant has been a cause for concern in Europe due to its apparent resistance to some vaccines, and its huge rate of infection across India and other countries. UK scientists have discovered that the variant is 60% more transmissible than the previous Alpha variant, and this has already begun to cause surges in many European countries. The rise of the Delta strain brings to an end a 10-week run of declining Covid-19 cases across the 53 countries in the WHO’s European region, as cases rose by 10% at the end of June.

The Delta strain is causing Europe’s economic recovery to look a little cloudy, meaning it may not happen as fast as initially thought. Thankfully, the zone’s economic recovery is already well on its way, with forecasts for the Southern and Eastern Mediterranean regions, along with the emerging countries in Europe sitting at 4.2% growth for the year. Many economies are expected to be back to pre-pandemic levels by the end of this year, but some may need until 2022. The zone’s recovery varies greatly between countries, and the Delta strain could impact some more than others, depending on the case numbers and restrictions that take place. European Bank for Reconstruction and Development (EBRD) chief economist Beata Javorcik had this to say about Europe’s recovery so far: "We see a strong rebound in industrial production, manufacturing and expert activities, partly because of dynamic growth in Europe and the US. It is more uncertain in services and tourism – the more countries [that] are dependent on services and tourism, and the less on manufacturing, the more likely they are to take some time to recover. The recovery is also dependent on the political situation and stability; some countries have vulnerabilities in that respect." Javrocik then went on to caution Europeans, "Although the revised forecasts give reasons to be optimistic, huge uncertainty remains with regard to the path of the COVID-19 Delta variant which poses particularly large risks for countries that have made less progress on vaccinations and for economies highly reliant on international tourism."

European economy and the Delta strain

So far, the European economy is on a strong path towards recovery, with the European Commission forecasting a 6.3% rise in GDP for the year. The Commission also forecasted a 4.8% growth in GDP for the entire EU this year. For 2022, our economy is expected to grow by a further 5% and the EU by 4.5%. We have submitted our Recovery and Resilience Fund plans to the Commission, and once financing has been secured, these programs can be implemented and recovery should speed up even more. Thankfully, the Delta strain has not yet had a big impact on Hungary, and therefore economic recovery remains on track. In fact, Minister of Finance Mihály Varga has estimated that the economy could be back to pre-pandemic levels by the end of 2021.

 

The way forward

Europe will need to accelerate the vaccination programs across the region, especially amongst younger people, and countries like France are identifying Delta strain hotspots and advising citizens against travel. Getting the Delta strain under control would be the only way to avoid any more restrictions and further impacts on economies across the region. You can keep up to date on the latest European economic information,. iFOREX offers traders hundreds of Contracts for Difference (CFDs) instruments including commodities, forex, ETFs, indices, and shares, plus innovative tools and features such as the economic calendar and trading signals, which can help you stay ahead of the markets and make more informed trading decisions.


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