The eurozone economy is set for a sharp recovery in the second half of 2021, as economic sentiment surged in April after the region’s vaccination programme finally gained momentum.
The European Commission's monthly sentiment survey for the 19 countries sharing the euro was more optimistic on Thursday, rising to 110.3 points in April from 100.9 in March.
The upbeat mood came as European Central Bank president Christine Lagarde said the eurozone economy was set for rapid growth in the second half of the year thanks to faster distribution of vaccines, which will allow life to return to normal.
UBS Global Wealth Management said vaccination progress suggests the eurozone will not be far behind the US and UK when it comes to easing restrictions.
“We continue to expect the eurozone economy to experience a sharp recovery in the second half of this year,” UBS said.
“An additional boost for eurozone activity is likely to come from its exposure to the global economic rebound.”
This sentiment was backed up by Ms Lagarde, who told an online event of the Aspen Security Forum on Wednesday that she was optimistic for the economy.
"By all accounts it seems that by the end of June, about 70 per cent of the population should be vaccinated at least with the first jab," Ms Lagarde said.
Eurozone output contracted 6.6 per cent in 2020 after the region was hammered by the pandemic. The economic bloc's recovery was hampered by a third wave of the coronavirus and a haphazard start to its vaccination campaign.
But Ms Lagarde said vaccines provide the "light at the end of the tunnel", so there was no reason to alter the ECB's projections for 4 per cent growth over the full year.
Europe’s ambitious Nest Generation EU plan is now ramping up with a number of member states submitting their national recovery plan to the European Commission this week, to receive the first disbursements from the EU’s €750bn ($908.06bn) Recovery and Resilience Plan.
Italy's economy and health system was severely affected by the pandemic, with the country set to receive one of the largest shares of the fund unveiled last year to support member states in recovering from the crisis.
This week, Italy's Prime Minister Mario Draghi said the destiny of the country depended on the success on the €248bn package of investments and reforms to repair his country's economy, of which €191.5bn is coming from EU funds.
Morgan Stanley said on Thursday that Italy's Recovery Plan can set its economy on a sustained higher growth track, although the near-term effects are more uncertain.
“The package has the potential to significantly raise Italian GDP growth in the medium term for at least two reasons. First, the plan is aimed at financing new investment projects with a high long-term return, namely infrastructure investments with a green or a digital tag," Morgan Stanley said.
“Second, the potential of the plan is further reinforced by the significant slack in the Italian economy. We think that increase in public investment has the ability to crowd-in private investment and consumption, especially if the government succeeds in passing the supply side structural reforms included in the plan, which aim at cutting red tape and making the country more business-friendly.”
France and Germany jointly presented their national recovery plan with grants of about €25bn and €40bn respectively, which will largely focus on greener economy and progress in digitalisation.
“With Germany dedicating 90 per cent and France 75 per cent to these two matters, both countries exceed the requirement outlined by the European Commission,” UBS said.
“In the short term, we expect the market reaction to these plans to be largely favourable. The absence of a delay to the monies being deployed should lend greater credibility to Europe's expected economic recovery.”
However, the eurozone economy still has some work to do. Less than a quarter of the bloc’s population have received their first dose of a vaccine and much of Europe remains in lockdown.
Services, which incorporate the sectors most affected by lockdowns, have felt the brunt of the impact, while goods production has fared much better, helped in part by strong demand from overseas.
“Nevertheless, many parts of the manufacturing sector in the eurozone continue to operate below full capacity. Disruptions to supply chains, bottlenecks caused by shipping delays, and the ongoing impact of social distancing have all contributed,” UBS said.
With vaccine supply bottlenecks expected to ease in the coming months, the mood has become much more positive.
The European Commission's monthly sentiment survey found that industrial confidence rose to 10.7 points in April from 2.1 in March.
In services, the eurozone's biggest sector responsible for more than two thirds of GDP, the mood was also more upbeat with the reading rising to 2.1 points from minus 9.6 in March.
Consumer optimism increased to minus 8.1 from minus 10.8, while the manufacturing industry's selling price expectations rose to 24.1 points in April from 17.5 in March, nearing its highest reading since March 2011.
The rise in economic confidence added to signs that the region is starting to recover, with the German government this week raising its growth forecast for the year to 3.5 per cent and expressing confidence that consumer spending will take off once the pandemic is under control.
The positive mood will boost the euro’s prospects against a weaker US dollar this year. The euro was trading at $1.2119 against the dollar at 2.06pm London time on Thursday, with USB expecting the pairing to reach $1.25 by the end of the year.
“As the global economy heals, investors are likely to diversify their current exposure away from the US dollar," the bank said.
"The corresponding increase in demand for eurozone exports will create further demand for euros, which will be another factor pushing the currency higher."
More on the eurozone economy
ECB's Christine Lagarde: 'Our hope is that 2021 is still the year of recovery'
Eurozone unemployment unchanged at 8.3% in February
Eurozone GDP contracted 0.7% in fourth quarter of 2020
Killing of Qassem Suleimani
What sanctions would be reimposed?
Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:
- An arms embargo
- A ban on uranium enrichment and reprocessing
- A ban on launches and other activities with ballistic missiles capable of delivering nuclear weapons, as well as ballistic missile technology transfer and technical assistance
- A targeted global asset freeze and travel ban on Iranian individuals and entities
- Authorisation for countries to inspect Iran Air Cargo and Islamic Republic of Iran Shipping Lines cargoes for banned goods
'C'mon C'mon'
Director:Mike Mills
Stars:Joaquin Phoenix, Gaby Hoffmann, Woody Norman
Rating: 4/5
LEADERBOARD
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Dates for the diary
To mark Bodytree’s 10th anniversary, the coming season will be filled with celebratory activities:
- September 21 Anyone interested in becoming a certified yoga instructor can sign up for a 250-hour course in Yoga Teacher Training with Jacquelene Sadek. It begins on September 21 and will take place over the course of six weekends.
- October 18 to 21 International yoga instructor, Yogi Nora, will be visiting Bodytree and offering classes.
- October 26 to November 4 International pilates instructor Courtney Miller will be on hand at the studio, offering classes.
- November 9 Bodytree is hosting a party to celebrate turning 10, and everyone is invited. Expect a day full of free classes on the grounds of the studio.
- December 11 Yogeswari, an advanced certified Jivamukti teacher, will be visiting the studio.
- February 2, 2018 Bodytree will host its 4th annual yoga market.
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KILLING OF QASSEM SULEIMANI
The specs
Engine: 2.0-litre 4-cylturbo
Transmission: seven-speed DSG automatic
Power: 242bhp
Torque: 370Nm
Price: Dh136,814
The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Safety 'top priority' for rival hyperloop company
The chief operating officer of Hyperloop Transportation Technologies, Andres de Leon, said his company's hyperloop technology is “ready” and safe.
He said the company prioritised safety throughout its development and, last year, Munich Re, one of the world's largest reinsurance companies, announced it was ready to insure their technology.
“Our levitation, propulsion, and vacuum technology have all been developed [...] over several decades and have been deployed and tested at full scale,” he said in a statement to The National.
“Only once the system has been certified and approved will it move people,” he said.
HyperloopTT has begun designing and engineering processes for its Abu Dhabi projects and hopes to break ground soon.
With no delivery date yet announced, Mr de Leon said timelines had to be considered carefully, as government approval, permits, and regulations could create necessary delays.
When is VAR used?
• Goals
• Penalty decisions
• Direct red-card incidents
• Mistaken identity
Mohammed bin Zayed Majlis
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UAE currency: the story behind the money in your pockets
more from Janine di Giovanni
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What is a robo-adviser?
Robo-advisers use an online sign-up process to gauge an investor’s risk tolerance by feeding information such as their age, income, saving goals and investment history into an algorithm, which then assigns them an investment portfolio, ranging from more conservative to higher risk ones.
These portfolios are made up of exchange traded funds (ETFs) with exposure to indices such as US and global equities, fixed-income products like bonds, though exposure to real estate, commodity ETFs or gold is also possible.
Investing in ETFs allows robo-advisers to offer fees far lower than traditional investments, such as actively managed mutual funds bought through a bank or broker. Investors can buy ETFs directly via a brokerage, but with robo-advisers they benefit from investment portfolios matched to their risk tolerance as well as being user friendly.
Many robo-advisers charge what are called wrap fees, meaning there are no additional fees such as subscription or withdrawal fees, success fees or fees for rebalancing.
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Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
If you go
The flights
Emirates and Etihad fly direct to Nairobi, with fares starting from Dh1,695. The resort can be reached from Nairobi via a 35-minute flight from Wilson Airport or Jomo Kenyatta International Airport, or by road, which takes at least three hours.
The rooms
Rooms at Fairmont Mount Kenya range from Dh1,870 per night for a deluxe room to Dh11,000 per night for the William Holden Cottage.
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
Killing of Qassem Suleimani
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Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
What drives subscription retailing?
Once the domain of newspaper home deliveries, subscription model retailing has combined with e-commerce to permeate myriad products and services.
The concept has grown tremendously around the world and is forecast to thrive further, according to UnivDatos Market Insights’ report on recent and predicted trends in the sector.
The global subscription e-commerce market was valued at $13.2 billion (Dh48.5bn) in 2018. It is forecast to touch $478.2bn in 2025, and include the entertainment, fitness, food, cosmetics, baby care and fashion sectors.
The report says subscription-based services currently constitute “a small trend within e-commerce”. The US hosts almost 70 per cent of recurring plan firms, including leaders Dollar Shave Club, Hello Fresh and Netflix. Walmart and Sephora are among longer established retailers entering the space.
UnivDatos cites younger and affluent urbanites as prime subscription targets, with women currently the largest share of end-users.
That’s expected to remain unchanged until 2025, when women will represent a $246.6bn market share, owing to increasing numbers of start-ups targeting women.
Personal care and beauty occupy the largest chunk of the worldwide subscription e-commerce market, with changing lifestyles, work schedules, customisation and convenience among the chief future drivers.
