European Commission released its Spring economic forecast yesterday which predicted a deep economic recession unseen since the 1930's resulting from the Chinavirus (COVID-19) shut down. The report makes the case for a 7.5% contraction across the 27-nation EU economy but also highlights the irregular nature of the country-by-country impact depending on the disease severity, economic resilience and policy choices each nation makes.
The disease is in slow retreat in most European countries but the specter of a "second wave" of the outbreak is slowing a return to normal life. As people get back to work it is apparent that the Chinavirus pandemic has crushed consumer spending, industrial output, investment, trade, capital flows and supply chains. The hardest hit countries will probably be Italy, Spain and France who who were ravaged by the Chinavirus and expect a 8%+ decline in national GDP. Greece, which is heavily dependent on tourism spending will also be hit hard economically even though the country has managed disease infection very well.
The report said that it's current projection is based on the assumption that the countries of the EU will start opening up for business and restart economic activity that stopped in mid-March. The forecast has calculated a rebound with EU GDP growth of 6.25% in 2021 but the recovery from Chinavirus is no sure thing. “A more severe and longer lasting pandemic than currently envisaged could cause a far larger fall in GDP than assumed,” the commission said.
Early this year, the grinding to a halt of activity in China was already set to dampen the demand for European exports as well as the import of intermediate goods. Particularly for exports of services, travel restrictions for Chinese visitors had already massively reduced bilateral China-EU tourism with the impact mostly felt in the favourite travel destinations of Chinese tourists (e.g. Italy and France).European Commission Spring Economic Forecast p.49
The Commissioners were carful not to blame China for the outbreak of the virus or cite the CCP's duplicity in refusing to contain the spread of the illness within its boarders. Reading through the report reveals China's deep economic dependencies it developed over decades in many EU counties. This history of "cooperation" was outlined in a letter written on the Occasion of 45th Anniversary of Establishment of China-EU Diplomatic Ties by the Ambassador Extraordinary and Plenipotentiary and Head of Mission of the People’s Republic of China to the European Union, His Excellency Mr. Zhang Ming.
Mr. Ming notes that bilateral trade has grown significantly between the EU and CCP over the past four decades and that these two entities need closer cooperation. "Forty five years on, China and the EU are now facing shared new missions under the new circumstances. The COVID-19 has posed unprecedented health, economic and social challenges to the whole international community, including China and the EU. This crisis has prompted us to carefully think about how to keep our economies and societies resilient, how to promote harmonious co-existence between man and nature, and how to steer globalization in the right direction. To find the answers, it is more important than ever to keep the China-EU relations in good shape"
Earlier this week President Trump moved Ron Gidwitz from ambassador to Belgium to acting representative of the U.S. to the European Union. Gidwitz will replace the disgraceful conspirator Gordon Sondland who was fired by Trump for his dishonest and confusing testimony at House Intelligence Committee hearings on the Ukrainian impeachment hoax. Mr. Gidwitz, a former cosmetics company CEO, will now be challenged with selling the Trump administration and its policies to the EU and achieving a speedy recovery from the COVID-19 pandemic.
For the remainder of 2020 the European Union will face the choice of a Ming vs. Gidwitz plan for dealing with the Chinavirus and it's aftermath. The EU might continue to "work together in solidarity" with the CCP as they've done over the past 45 years. The US strategy of decoupling from China while maintaining a non-reliant trading relationship is difficult but important for the future of humanity. The future of Western Civilization depends on the choices the European countries make in the coming months and how the EU decides to "steer globalization" in response to the Chinavirus.
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