The recovery profile for the European economy is more pessimistic than for the US economy, all the way through 2022. If your business has any direct or indirect connections with Europe, take heed – things will get worse before they get better.
The difference in how the two economies came into 2020 is a contributing factor to this disparity. Before the double black swans of COVID-19 and the oil price crash precipitated by the Saudi-Russia conflict, the European industrial economy was already in Phase D, Recession. US Industrial Production, our benchmark for industrial activity stateside, was in Phase C, Slowing Growth. The US, therefore, was in a stronger economic position when the black swans arrived.
As of late April, the COVID-19 fatality rates of infected people for several major European countries were much higher than the fatality rate for the US. That will hinder some of Europe’s recovery.
- UK – above 15%
- France – above 14 %
- Italy – above 13%
- Spain – above 10%
- US – below 6%
The US industrial economy is expected to recover to late-2019 levels by the end of 2022. In contrast, year-end 2022 European industrial activity will come in 5.7% below the 2019 level.
This means that companies exposed to the European economy need to take every available action to mitigate the impact of Europe's recession on their business. To keep up to date with our forecasts and analysis of the situation, subscribe to our ITR Trends Report™. Or if you would like to discuss how Europe's slower recovery will impact your company, please reach out to us. We’re here to help!