Deficient demand or supply in the euro zone in 2021?

First, there is the question of the risk of persistently weak demand for goods and services in the euro-zone countries. This weak demand may result from the deterioration in companies’ financial situation, household precautionary savings or weak global trade. But it is important to not overlook the risk of persistently weak supply of goods and services also , due to the decline in labour productivity in many sectors of the economy under the effect of the new public health constraints. If, all things considered, the weakness of supply outweighs the weakness of demand, then one should expect to see inflationary pressures and the need for economic policies aimed at stimulating supply (for example labour cost reduction) rather than demand. Moreover, we should expect a larger fall in GDP than is current ly estimate d .