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Published: 22 November 2021
Edit: Ahmed Al-Kumi
The rebuffs of the return of the specter of the Corona closure in Europe raised fears of new collapses for economies still trying to recover from the devastating effects of the past closure, and experts say the closures would bring the continental economy into disarray immediately.
A US magazine reported last week that Austria would impose a total closure across the country, causing concern among some commentators about the widespread government desire to control the population across the continent.
According to a recent report from the London-based financial consulting firm Capital Economist: "The European economy could be bombed this winter if the major powers follow Austria's example. So stagnation or even deflation is reasonable. "
For Austria, a three-week shutdown would reduce GDP growth by 1.5% in the fourth quarter as reported. If the closure lasts longer than the proposed three weeks - a real possibility given how Governments have acted over the past two years - it is expected to deal a bigger blow to the economy.
The report states that the closure of Austria alone would have little impact on the economy of the European Union. EU growth is likely to be affected by about 0.1%.
The report makes clear that Germany must be at the top of the list of economists' concerns. Germany is the fourth largest economy in the world, and the largest in Europe. The German Government announced this week that it will restrict access to public places for non-restaurants in areas where hospitals are under the greatest pressure, and this partial closure may be just the beginning. The report stated that the country's Minister of Health would not rule out a nationwide ban.
All of this is bad, but it comes against the backdrop of already bleak economic growth in the single currency area, known as the euro zone. "We expect the composite purchasing managers' index in the euro zone to decline again in November, leaving it at its lowest level since March," the report states.
Worse still, the composite Purchasing Managers' Index, which measures the health of the private sector in the eurozone, could be dangerously close to a November downturn as is now the case. The Capital report expects a 52 reading of the Procurement Managers' Index. Less than 50 indicates contraction.
"We expect growth to slow in the fourth quarter as turbulence of supply change, high natural gas prices and high corona situations affect the economy," the Capital report said.