The second wave of COVID-19 challenges the old continental economy

Europe is once again the epicenter of the COVID-19 pandemic with more than 12 million cases and about 300,000 deaths across the continent.

The rate of spread of the SARS-CoV-2 virus causing the COVID-19 pandemic was rapidly increasing in a number of countries when within half a month, positive cases increased by 459% in Serbia, 200% in Italy and Greece, 150%. in Germany and Sweden …

The new blockade is the response of most countries on the continent as this approach in the first wave has proven to be effective at varying degrees. So far, the difference from Spring times may be that the blockade is less stringent and schools remain open in most countries.

European countries are now simply responding to try to avoid the worst without a long-term plan. How the second wave of COVID-19 leads to business disruption with economic impacts remains an open question.

Heavy economic consequences

The major economic consequences of the first European blockade are still there, while the second wave of COVID-19s suddenly strikes. The blockade measures being imposed again by many European countries have a strong impact on the fragile economic recovery of the “old continent”.

Due to the impact of the COVID-19 epidemic, the Eurozone economy has declined by 12.7% from January to September this year. Photo: VNA

European Commission (EC) on 5/11 said the wave of COVID-19 infection slowed the recovery, and warned the regional economy would not return to normal before 2023. of the COVID-19 epidemic, the Eurozone economy has declined by 12.7% from January to September this year. The EC believes that the Eurozone economy is “out of breath” despite recording a better recovery than expected in the middle of this year. European countries are grappling with the second wave of infections more heavily than the first wave earlier this year.

The German Institute for Economic Research (DIW) said the second blockade to prevent the strong spread of COVID-19 would cost Europe’s largest economy about 19.3 billion euros, economic output. economy will decrease by 55% in a quarter.

The hospitality and restaurant industries will be hit hardest with losses of around 5.8 billion euros, the sports, culture and entertainment sectors will have to deal with a 2.1 billion euro decline and sales. odd about 1.3 billion euros, German industry losses about 5.2 billion euros. In addition, the remainder of the damage will belong to business service companies, logistics companies and movie theater operators.

Measures to limit the spread of COVID-19 continue to shock other economies in Europe. The Central Bank of France said that economic activity of the Eurozone’s second largest economy in November 2020 decreased by 12% from normal levels and worse than the 4% decline in October 2020.

Without additional support, many businesses will find it difficult to “survive” after this second blockade and as a result, countless workers will lose their jobs. During the previous close, many people had to use their savings to survive.

Countries in Europe are increasingly imposing partial closures. If the gap prolongs and is not reopened on year-end holidays, there is a possibility that many European countries and even Switzerland – which are judged to have responded well in the first wave, will facing the risk of serious socio-economic recession.

Switzerland responded to the initial COVID-19 wave by shutting down shops, theaters and restaurants, and using interest free loans and job subsidies to keep the economy afloat. . The government is currently using targeted social distancing measures to contain the epidemic, and depending on the situation of the epidemic states different blockade measures can be imposed.

From a well-managed country, Switzerland has become a strong spreading zone of the SARS-CoV-2 virus since the beginning of October up to now. Switzerland has 1,580 new infections per 100,000 people, the highest rate in Europe. The Swiss restrictions are judged to be milder than elsewhere in Europe. Experts say that while the shutdown will hinder economic activity, “high health risks coupled with fear will prevent people and businesses from pursuing economic activities”.

So far, the Swiss economy has developed relatively well. Switzerland’s approach is towards self-responsibility, depending on the consciousness of its people, while the government is trying to find a viable and sustainable solution that minimizes economic damage.

The Swiss government is proposing CHF 200 million ($ 219 million) financial assistance to companies affected by the restrictions to slow the spread of COVID-19. Grants cannot exceed 10% of a company’s 2019 sales, while loans are capped at 25% of last year’s sales and cannot exceed CHF 10 million. The government also took steps to continue to support freelance and other workers.

Limit business disruption

Tightening measures to control the disease will certainly impact economic activities, but it is safe to believe that the impact this time will not be as severe as the outbreak that occurred earlier this year. The import and export activities of essential commodities such as agricultural products, seafood, coffee, fruits and vegetables … will not be affected.

In the first wave of COVID-19, European countries in turn closed borders, even blocked the export of medical goods and supplies. There was a Europe where rows of cargo-laden vehicles were waiting for tens of kilometers on the German-Polish border, or there were regions that struggled to cope with epidemics (like in Northern Italy. ) without being able to obtain medical supplies from neighboring countries.

European countries lock themselves in a pattern of restricting freedom of citizenship, but shrink into poverty when economic activity is constrained and Europe does not want to repeat this scenario. Adverse situations that people were once worried about are becoming “the new normal state”.

On November 13, the Italian Ministry of Health issued a new directive adding two regions, Campania and Toscana, to the list of red zones - the region with the highest risk of COVID-19 epidemic.  Directive takes effect from 15/11.  Photo: VNA
On November 13, the Italian Ministry of Health issued a new directive adding two regions, Campania and Toscana, to the list of red zones – the region with the highest risk of COVID-19 epidemic. Directive takes effect from 15/11. Photo: VNA

It is expected that the leaders of the European Union (EU) will hold an online summit on November 19 to discuss how to respond to COVID-19 and the impact of this pandemic on public health. people and the economies of the bloc countries.

The EU leaders try to come up with solutions to minimize the damage while maintaining the openness of the borderless Schengen area, but the second COVID-19 pandemic as a test for Europe on legality and effectiveness of the socio-economic system. In unexpected situations such as the COVID-19 pandemic wave, cooperation between European governments is sometimes in a really difficult situation.

Of course, each European country, with its own conditions and circumstances, will have different solutions in the fight against COVID-19, but overall, the EU needs to have a common framework and approach to ensure that guarantee stability. Europe needs to pass the current difficult test and be more complete in the integration and integration of the continent.

However, the disease situation and the success of COVID-19 vaccine will remain the key determinant of the continent’s future economic recovery. This pandemic is a health crisis that happens once every 100 years, so it takes important policy breakthroughs at the national, regional and national levels to go a long way together. thorny.

It also means that there cannot be an effective immediate response to this global pandemic. The solution to the problem is a comprehensive approach, using all available tools, and at the same time countries need to unite, work closely together to prevent epidemics to help the economy recover.

Design by NewsLax