Almost half of the European Union (EU) member states will not be able to fully recover from the effects of Covid-19 by the end of 2022, and countries highly dependent on tourism, such as Portugal and Spain, could take longer, estimates the European Commission (EC).
“Almost half of our member states should not recover their Gross Domestic Product to pre-pandemic levels by the end of 2022,” said European Economic Commissioner Paolo Gentiloni, speaking at a press conference in Brussels to present the EU executive’s autumn macroeconomic forecasts.
According to Gentiloni, this estimate reflects differences in the seriousness of the pandemic and the severity of the related containment measures, as well as in internal political responses and economic structures. “It is even expected that countries with large tourism sectors will take longer to achieve a full recovery,” he said.
The European Commission has revised downwards the pace of economic recovery in the euro zone in 2021 in the face of the resurgence of the pandemic. It now estimates that the economy will recover only 4.2% after a contraction of 7.8% in 2020. In its autumn economic forecasts, published on November 5th, the Commission gave slightly better macroeconomic projections for this year: from a drop of 8.7% in GDP forecast back in July, it now projects a of 7.8% in the single currency area.
With the introduction of new containment measures such as lighter confinements and closures of establishments, it is expected that the severity of the measures will gradually decrease in 2021.
Insisting that it is not easy to have solid forecasts in such an uncertain situation, Gentiloni stated that “the pandemic has caused the deepest recession in EU history, surpassing the one seen in the great financial crisis”.
Before the recent new wave of Covid-19, the European Commission noted that certain segments of industry, such as construction and retailing, “had recovered vigorously during the summer driven by strong repressed demand,” according to Gentiloni.
The same has not happened in services that depend on person-to-person interaction, and whose levels of activity have remained weaker, since containment measures have remained in place. “This has affected the demand and supply of services involving, for example, travel, tourism, restaurants and entertainment,” said the European commissioner.
Commercial Aviation: Recovery foreseen for 2023
According to global travel specialists Atmosphere Research Group, that recovery timeline will slowly stretch out for two full years. A gradual recovery will be seen instead of a fast bounce-back. Domestic travel will lead in the recovery numbers.
During the first months travel is conducted by what Atmosphere Research Group calls ‘tiptoe travelers’. This group will be better educated and from the highest income groups, suggests ARG. They can be described as ‘first to fly’ or ‘cabin fever escapees’. Their major focus will be on domestic travel with some long-range international travel.
This is mid to late 2022. ARG predicts that this group will be termed as ‘pioneers’. It will be mostly conformed by business travelers. The group will also include mid-to high-tier frequent flyers, with a household income of US$125k and higher. Way of traveling: mainly international flights.
By then, many will start following the trend. The phase is expected to take place in early 2023. This is the time when the travel industry will experience a near-normal volume of travelers. By mid 2023, travel is likely to reach pre-pandemic levels.