Goldman Sachs and Morgan Stanley see strong rebound for the Eurozone economy: “Delta variant is a manageable risk”

Goldman Sachs and Morgan Stanley see strong rebound for the Eurozone economy: “Delta variant is a manageable risk”
Goldman Sachs and Morgan Stanley see strong rebound for the Eurozone economy: “Delta variant is a manageable risk”

The investment banks Goldman Sachs e Morgan Stanley they see a strong rebound in the Eurozone economy in the second quarter of the year. And they estimate that the following months will also be characterized by strong growth, despite the Delta variant. This while, in Italy, the study center of Confindustria flaunts caution claiming that the increase in contagion in various parts of Europe poses “new risks of cooling down activity, especially in tourism and in particular from August, both through the trust channel and for any new anti-Covid measures “.

The latest Morgan Stanley report indicates a potential 1.5% increase in euro area GDP in the second quarter, with Italy expected to maintain a similar growth rate. Growth should have been driven by the consumption. Looking to the future, the US investment bank underlines that the Delta variant is the main threat compared to the forecast of + 2.6% for the third quarter, with the countries of Southern Europe particularly exposed in light of the importance of the tourism in this area. For Italy, the forecast of + 1.5% in the 2nd quarter reflects the significant increase in confidence indicators both at company and consumer level, which should translate into a strong recovery of activity in Junedespite persistent concerns in the manufacturing sector cause bottlenecks of the offer. Less cautious Goldman, according to which the indices Pmi flash in July are “consistent with a continuous rebound in economic activity across the euro area, in line with our GDP forecasts”, and the delta variant is “a manageable risk”. The area-wide flash PMI “again increased more than expected, driven by increases in services, and it went up at the highest level in more than twenty years “.

Also for the study center in Viale dell’Astronomia, the recovery is proceeding robustly and finally also involves services and consumption, but the increase in infections could slow it down. In its Flash conjuncture the Csc detects a strong rebound in the second quarter of the year which could be followed by a slower trend in the third and fourth. In particular, “in June the ascent was strengthened, thanks to the acceleration of vaccinations and less restrictions. In July, however, the increase in infections in various parts of Europe poses new risks of cooling economic activity, especially in tourism and in particular from August, both through the channel of trust and through any new anti-Covid measures ” . According to the Centro Studi, the recovery of services, based on current data, should continue in the third quarter with the final expectations of June on very high values. “While the investments continue their favorable dynamics in the spring months, with orders on the rise, the helm of the Italian recovery is in the hands of families, whose expenditure is finally estimated to be recovering, thanks to more mobility and use of accumulated savings “.

In the industry, the trend remains one of growth, without major spikes but in any case in line with previous months. The proof also comes from the data on power consumptions: in June 2021 the demand was 27.4 billion kWh, with a demand up by 1.9% compared to last May and by 13.8% on the volumes of June 2020. In Terna’s surveys, consumption industrials continued to remain above pre-Covid levels, thanks to the increase in almost all monitored sectors. On the work front after a first quarter in which, second the OECD, the employment rate fell to 57.1%, employers have returned to expectations of an increase in employment: from March in manufacturing, from May in services, the CsC continues.

According to the ICC index, the recovery in consumption in May and June is more pronounced for the part relating to services, thanks to the resumption of travel and spending outside the home. And the expectations are positive: the internal orders of consumer goods producers rose 6 points in the second quarter, household confidence is above pre-crisis levels. In industry, the growth path continues at stable rates, according to the SME (62.2 in June). Thanks to the recovery in June (+ 1.3%, Csc estimates), production confirms expectations and grows in the second quarter (+ 1.1%), as in the first, despite the correction in May (-1.5%). This affects almost all sectors: the major exception is the sector fashion, still penalized by the drop in consumption linked to the new habits in the Covid era. Expectations on production and orders are at high levels, but there are concerns about the increase in purchase prices and, in some cases, for the shortage of materials. The shadow of the new infections on the recovery also touches the Germany where the index Ifo, which marks the trend in confidence, drops to 100.8 points from 102.1 expected and 101.8 previously revised to 101.7 points. On the other hand, the index on current conditions improved, reaching 100.4 points from the previous 99.7 points, lower than the 101.6 expected by analysts. The sub-index relating to expectations worsened, reaching 101.2 points from the previous 103.7 and against the 103.3 points estimated by the market. And to weigh, it is noted, are “supply bottlenecks and concerns about rising infection numbers that are weighing on the German economy”.

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