CM October 2021

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SOUTHERN EUROPE
KEY TAKEAWAYS
GROWTH
Positively, after having
contracted by high
single digits or even low
double digits in 2020,
real GDP growth in the
region has turned
positive again.
In the Eurozone, to which all four covered
markets belong, the economy fell by 1.3% year
on year (y/y) in January-March 2021 but
switched into a much higher gear in Q2 when
real GDP expanded by a never seen before
13.6%.
UNEMPLOYMENT
Positively, unemployment
did not increase by as
much as initially feared,
helped by the sizeable
wage subsidy schemes
national government
launched during the
pandemic. Overall, the Eurozone's harmonised
unemployment rate rose from 7.1% in March
2020 to 8.6% in August 2020. Since then it has
lowered to 7.7% again in June 2021, indicating
that the worst for the European labour
markets is over.
MARKUS KUGER,
CHIEF ECONOMIST
Average payment delays in days have increased in most European
countries as most companies faced faltering demand for their goods and
services while at the same time having to deal with social distancing
rules or lockdown measures. On a European level, delays increased by an
average 1.2 days, with Italy (1.3 days increase) and Spain (2.1 days)
reporting above-average deteriorations. The outlier is Portugal, where
average payment delays fell by more than 3 days.
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INFLATION
For the remainder of
2021, inflation is likely
to stay on its current
upward trend as base
effects (such as
temporary tax cuts and
low commodity prices in 2020) are still at play
and supply chain disruptions are also pushing
producer prices upwards. Positively, it is likely
that the increased price pressures will subside
in 2022 as supply chain integrity will be
restored and base effects will be eliminated
from the calculation base.
Southern Europe
Economic Outlook