Trade, Innovation, and Productivity
According to the latest (August 17, 2021) European recovery statistics published by the EUROSTAT, most of the EU economic and social indicators improved in the second quarter of 2021. Some indicators have already returned to or exceeded their pre-pandemic levels. For instance, in June 2021, EU imports and retail trade were respectively 4.7% and 7.5% higher relative to pre-pandemic levels. The economic sentiment indicator recorded its highest level since the outbreak of COVID-19. Moreover, unemployment and excess deaths continued to be on a declining trend. However, the level of the EU GDP in 2Q2021 was still 2.3% lower than it was two years ago. Industrial production and exports also remain below their pre-pandemic levels and, while they have grown considerably relative to the slump recorded in April 2021, their recovery has stalled since January 2021.
Labour Market and Environment
The latest study by the European Migration Network (EMN) on responses to long-term irregularly staying migrants revealed that among the EU Member States that do not differentiate between different types of authorisations, only Poland, Hungary, and Sweden grant equal labour market access to their nationals, legal migrants, and irregular migrants issued with a return decision.
The study also indicates that overall, the Member States prefer to restrain the irregular stays through the (voluntary) returns. However, the COVID-19 pandemic, along with the travelling restrictions, complicated the realisation of return decisions. This problem drew attention to the situation of migrants who cannot be returned. Interestingly enough, the study reveals that the closure of borders, which led to some labour market shortages, resulted in promotion of the regularisation of skilled workers in sectors with deficits, for example in agriculture – although admittedly this occurred only to a limited extent.
Macro and Fiscal
The improved health situation and easing of restrictions over the last quarter in the EU brought forth a better near-term outlook for the European economy, according to the European Commission’s Summer 2021 European Economic Forecast. The GDP in the EU is forecasted to grow by 4.8% in 2021, 60 basis points higher compared to the projections in the Spring 2021 Forecast. A similar rebound is also projected for the global economy with a 5.6% growth in 2021 as the World Bank June 2021 Global Economic Prospects remarks. The economic recovery in the EU will largely be driven by the rise in private consumption and an introduction of the Recovery and Resilience Facility. However, the possibility of a spread and emergence of other variants of COVID-19 poses risks and increases uncertainty, which may hinder the economic recovery. The pace of recovery during the final months of 2021 will likely depend on the behaviour of households and firms in face of any new restrictions that might be imposed should the fourth wave of the pandemic unfold.