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Wholesale Banking

April Economic Update: bigger things than the Suez ship are still firmly stuck in the mud

The Ever Given’s canal mishap is surely a metaphor for the uneven global recovery. In our April economic update, we look at the growing divergence between the US and eurozone, the potential impact of the pandemic for cohesion in Europe and the greening of monetary policy, and the outlook for inflation amid higher shipping costs and chip shortages.

One of the main themes in the global economy is the growing divergence between the US and the eurozone. Or as Eurosceptics would say, the growing divergence between the eurozone and the rest of the developed world.

While the US economy is powering ahead, boosted by the Biden stimulus and a much faster vaccination campaign, the eurozone economy once again sees almost everything that could go wrong go wrong. In this regard, the sight of tugboats trying to unstick the containership Ever Given in the Suez Canal is to some extent a metaphor for the difficulty in getting the eurozone recovery on a sustainable course.

A third wave of the pandemic has pushed several eurozone countries to tighten lockdown measures again or to extend them, jeopardising a reopening of the economy in April. Exponential growth of the vaccination pace is still possible after Easter but currently looks too good to be true. And as if things couldn’t get any worse, the fact that the temporary blockage of the Suez Canal will mainly hit Asia and Europe but not the US, adds to the eurozone’s problems.

Read the report on Think