BlackRock Investment Institute

Macro insights

Tracking Covid-19 in the euro area

The increase in Covid cases in the euro area may not foreshadow a return to full national lockdowns. The growing cases partly reflect a greater number of tests. Importantly, fatality rates have not risen in line with cases, as the average age of new Covid patients has dropped. Better testing and the slower growth in fatalities mean authorities have more time to respond to local flareups and improve track-and-trace capabilities. Mask-wearing mandates and social distancing laws appear to be helping slow the spread of the virus.

Euro area cumulative Covid-19 cases and deaths, 2020

Sources: BlackRock Investment Institute and Our World in Data, with data from Haver Analytics, Sept. 2020. Note: the dots show 14 day intervals in case and fatality counts. Wider spacing between dots denotes faster growth. A measurement change in Spain accounts for the slight drop in deaths.

The euro area’s restart is still outpacing expectations, yet it appears to be losing momentum. Mobility in the region is now just 10% below pre-Covid levels, versus 25% in the U.S. The recovery has slowed in locations where infection rates have picked up, but the direction of travel still points to increasing mobility. Industrial production and construction have recovered strongly, especially in Italy and Spain. The services rebound has been more mixed, reflecting a tough environment for contact-intense sectors.

 

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