Eurozone: The unemployment rate is still rising, inflation sinks into the negative zone

Eurozone: The unemployment rate is still rising, inflation sinks into the negative zone

The unemployment rate in 19 Eurozone countries rose to 8.1% in August 2020, from 7.9% in July, and inflation fell to -0.3% in September.

Illustrative photo (Source: AFP / VNA)

The unemployment rate in Europe in August 2020 rose for the fifth consecutive month, amid growing concerns that relief program Large governments will not be able to keep many of the businesses affected by the COVID-19 pandemic persistent forever.

According to the official figures of the European Statistical Office (Eurostat), unemployment rate in 19 countries in the Eurozone, increased to 8.1% in August 2020, from 7.9% in July.

Thus, in August alone, Eurozone had about 13.2 million unemployed people and job loss increased by 251,000 people.

Economists predict this rate will increase further in the coming months, as wage support programs expire, while a spike in COVID-19 cases in many countries has led to to some countries decide to re-impose travel restrictions, severely affecting social activities and businesses.

European governments have spent trillions of euros to help businesses and create programs to retain workers.

In Germany, Europe’s largest economy, around 3.7 million people are still benefiting from large-scale government relief programs.

With the current unpredictable development of the pandemic, the German Government has decided to extend the duration of the relief programs until the end of 2021.

The European Central Bank (ECB) has also pumped 1,350 billion euros ($ 1,570 billion) into the regional economy to keep loans at low interest rates, while printing new money at least. middle of next year.

Although these measures have slowed the rise in unemployment rate, job loss in Europe is still on the rise and is expected to remain for many months to come.

Firms in the hardest hit sectors such as aviation, tourism and restaurants are expected to experience a long period of poor business and layoffs.

On the other hand, the economic slowdown has in some cases spurred changes that occurred before the pandemic, such as technological changes in the auto industry.

Some industry players have recovered stronger after the blockades in March and April 2020, but companies operating in the service industry have remained stagnant, especially workers. and small business owners in the restaurant and hotel sector.

Also according to Eurostat, inflation’s Eurozone fell deeper and fell into a negative zone in September, amid sluggish spending due to the crisis COVID-19.

Eurostat said Eurozone inflation fell to -0.3% in September 2020, from -0.2% in August and further away from the target of about 2%.

The transition to deflation will put pressure on the ECB to introduce more stimulus packages and encourage governments to spend more.

In the long term, ECB forecasts that the average inflation of the Eurozone will only reach 1.3% in 2022, still much lower than the set target. This has sparked calls for policy reforms for the bank.

ECB President Christine Lagarde said on September 30 that the bank can evaluate the “usefulness” of a policy solution in which inflation is allowed to temporarily exceed the target.

This move comes after the US Federal Reserve (Fed) announced a policy change in late August 2020, which will allow inflation to increase to allow the economy to create more jobs. to benefit all workers, especially families with exceptionally low incomes./.

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