The Old Man In The Infirmary
In Europe, the Pandemic wreaked havoc across the region, leading to long shutdowns across multiple countries. And, unlike the US, where GDP will fall a little over 3% this year, not different from a normal recession, GDP in Western Europe seems headed for a drop of over 7%, a result somewhere between a recession and a depression. For the UK and Italy, life will exhibit an even worse outcome, with Italian GDP down almost 9% and UK GDP dropping over 10%, producing depression like outcomes. The best results sit in Scandinavia and Eastern Europe which either did not lock down their economies or put limited restrictions in place, enabling commerce to continue. For Europe, the year is ending on a sour note, with new lockdowns in place.
However, not all is dark. There exist glimmers of hope that should lead to a much better outcome next year. First, German Industrial Production continues to recover at a more rapid pace than in 2009, as the following chart demonstrates:
With numerous countries in Europe providing inputs, a recovery here will continue to drag along numerous other countries. In addition, European Auto Sales continue to recover. According to the European Automobile Manufacturers Association, EU New Passenger Car Registration rose to 933.000+ in September, growing 3.1% Year-Over- Year (YOY). As the following monthly chart shows for 2020, car sales recovered completely to their pre-Pandemic levels:
Numerous other indicators demonstrate a similar recovery. Thus, while the portents look dark near term, with The Old Man In The Infirmary and new lockdowns announced, the outlook appears bright, with full recovery ahead in 2021.
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