The coronavirus pandemic has hit the global economy hard, but the effects are disproportionate between countries. In particular, the gap between the US and the EU has widened considerably during the pandemic, which is attributed to a large extent to the way in which the effects of the pandemic are being handled and the economy being supported by governments.
The eurozone economy shrank by 6.6% last year, when the corresponding decline in US GDP was 3.5%. According to estimates, the Eurozone is expected to experience a double recession, as GDP will decline again in the first quarter of the year. The US economy will grow by 6.5% this year and 4% next year, while the Eurozone is projected to grow by 3.9% and 3.8% respectively. Also, many analysts expect a significant improvement in the US labor market, with unemployment expected to fall from 6.2% to 4% by the end of the year, with a further decline to 3.5% by the end of 2022.
Biden's economic support package of 1.9 trillion is expected to give a significant boost to the US economy growth, while on the other hand the Eurozone Recovery Fund appears with much smaller potential and slow disbursement of funds. Due to the fiscal support, the American economy will be able to return to the same levels of growth, as before the pandemic, within the next year, while for Europe the road is not exactly paved, and it will take several years. In particular, through Biden’s support package, the US economy will have received total fiscal support of 11% to 12% of GDP, a rate three times higher than the recession of 3.5% last year. By contrast, the corresponding fiscal support for Eurozone countries, including fiscal measures taken, emergency expenditure, tax relief and Recovery Fund funds, will not exceed 6% of GDP, which equates to just 70 % of GDP decline in 2020.
Also, at a time when some major US states have lifted most of the restrictions, in several European countries where the restrictions have been relaxed, outbreaks of the virus are now being recorded, resulting in the imposition of new restrictions.
Finally, on the vaccination front, every US adult will be eligible for vaccination by May 1, setting July 4 as the milestone for returning to a degree of normalcy. Europe, on the other hand, is struggling to meet the vaccination target of 70% of adults by September, which is questionable due to delayed vaccine deliveries and the war that has erupted over the AstraZeneca vaccine.