Report
Patrick Artus

How many years will it take to recover the lost GDP?

Currently available forecasts indicate that the GDP lost in the euro zone in 2020 will be recovered in two years, in 2021-2022. Can we believe in such a rapid recovery of GDP, when after the subprime crisis it took seven years for the euro zone to return to its pre-crisis GDP level? Admittedly, the United States returned to the pre-subprime crisis GDP level after three years, and fiscal and monetary policies are very expansionary in the euro zone currently, as in the United States after the subprime crisis. But we must not forget: The slow recovery in employment in the euro zone compared with the United States, as the labour market functions very differently; The effect of the increase in corporate debt on investment; The divergence between sectoral situations that will complicate the return to employment; And the negative effect of the new health standards - as long as they are present - on productivity and potential production. It would therefore be very surprising if the lost GDP will be recovered as quickly in the euro zone as in the United States after the subprime crisis.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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