Long Way To Recovery For The European Economies Affected By COVID-19

Almost a year ago, the COVID-19 virus closed down economic activity throughout the world. Among the first countries to shutdown completely were Europeans.

Those looking back to March-April last year may remember that while the Italians and Spaniards were under complete lockdown, the United States economy remained open/. 

As it turned out, the virus’ spread slows down during warm weather and spreads faster when temperatures fall. European nations recovered the lost ground partially, but only with the help from governments and the European Commission. In other words, they survived by receiving money borrowed or printed.

While it was imperative to do so, time has passed, and we are now almost a year into the pandemic. For many European economies, even assuming that the virus goes away tomorrow, it will take years to reach their pre-pandemic level.

Years of Economic Struggle Ahead

Consider the Spanish economy. The tourism sector is its backbone. The famous tapas and cafes at each corner are the attraction and envy of many nations.

In the first nine months of last year, the international tourist expenditure in Spain dropped by a whopping $73 billion when compared to a similar period in 2019. As the new year started with more lockdowns, expect the same, or not even worse, to happen in 2021.

Let’s say, for the sake of running some numbers, that in 2021 Spain loses another $73 billion in potential revenue from the tourism sector. In total, about $150 billion. But this is only one sector and accounts only for the money not spent by visitors. If visitors do not arrive, locals lose their jobs – and in the end, businesses will close too. A vicious circle starts, and suddenly we do not talk about “only” $150 billion but about much, much more.

Now let’s move to France. Paris is the most visited city in the world, with only the Tour Eiffel generating huge amounts of money each year as it receives millions of tourists. One can imagine how empty the place was/is during the pandemic.

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