FROM THE PANDEMIC AND UNCERTAINTY TO A RESTART OF THE ECONOMY
2021: Beginning of the end for the pandemic, and transition to a new economic reality
2021 marks the beginning of the end for the COVID-19 pandemic and a gradual transition to a new normal. The mass rollout of vaccines is a milestone in the global effort to contain the spread of the virus and resolve the public health crisis. Accelerating the vaccination programmes will be crucial to curbing the pandemic and to reopening the economies.
Until then, the pandemic continues to pose, at least in the short term, serious risks to public health and to the rebound of economic activity. Various factors are prolonging the uncertainty, fuelling negative expectations, disrupting economic activity and delaying the recovery, in particular: (a) the difficulty in controlling the pandemic; (b) the fear of coronavirus variants; and (c) the delays in vaccine deliveries and in the implementation of national vaccination programmes across Europe.
Nonetheless, a rebound of global demand and the extension of fiscal stimulus packages provided by the large developed economies, including the new European recovery instrument Next Generation EU (NGEU), in combination with the maintenance of favourable financial conditions, support expectations for a solid recovery in the EU from the second half of 2021 onwards.
The outbreak of the pandemic in early 2020 was a major shock to the world economy. Countries were hit by an unexpected and deep crisis, both health-related and economic. Values, rights and constants were tested. Past certainties about the functioning of societies and economies and about the conduct of economic policy were called into question. The human toll worldwide has been enormous. The world economy experienced its worst peacetime recession in almost 100 years, with global GDP contracting by a historic 3.5%.
The end of the pandemic, however, will form a new social and economic reality. A new world, predominantly digital, is emerging, in which knowledge, scientific research, technology and innovation will be the key drivers of economic prosperity. There is growing awareness of the need for global solidarity and cooperation in order to improve collective resilience to symmetric shocks. The crisis has also reaffirmed the need to proactively address the impacts of climate change and protect the natural environment as an essential condition for a safe coexistence of man and nature....