The Eurozone registered a GDP growth of 2% during the second quarter after two quarters of contraction. The reopening of Eurozone economies since end Q1/early Q2 has spurred economic activity, point out Rabobank analysts. They see the main risk to the short-term outlook steming from the highly contagious Delta variant.

Key Quotes: 

“The recovery in the services sector should be sustained in the coming quarters, on the back of rising vaccination rates and the accompanying gradual return to normal (58% of the EU population has had at least one shot and 48% is fully vaccinated). In addition, uninterrupted strong order books in the manufacturing sector, improving global trade and the Next Generation EU support the outlook. Furthermore, the ECB Bank Lending Survey suggests that demand for business loans in the Euro area is starting to be more driven by investment intentions again, rather than building liquidity buffers, after this was disrupted by the pandemic.”

“The main risk to the short-term outlook stems from the highly contagious Delta variant which has been slowing the phasing out of lockdown measures and has already even caused governments to rollback relaxations and tighten international travel restrictions.”

“Yet, so far the overall macro-impact of the Delta variant seems to be limited still in most countries.”