Lockdowns in Europe rewrite economic forecasts

Economic forecasts issued only a few weeks ago in Europe, which projected continuing slow increase this year in GDP and business activity in sectors critical to the timber industry, such as construction and furniture, will need to be completely revised in the face of the Covid-19 outbreak.

Issues like Brexit, enforcement of EUTR, the slowing pace of manufacturing in Germany, and the US-China trade dispute, that only a few weeks ago seemed likely to lead the narrative of changing demand for tropical wood products in Europe during 2020, have taken a back seat in response to the transformative effects of the pandemic.

In the last two weeks, large parts of Europe have been put into lockdown to control spread of the virus. Schools and universities, and most shops, bars, restaurants and other public venues have been forced to close. People are being ordered to remain at home. Public transport is being reduced to a skeleton service for essential workers.

Manufacturing and construction activity is continuing in Europe but at much reduced levels and pressure is mounting to stop altogether to prevent any further spread of the virus.

Governments in Europe, as elsewhere, face a tough choice to strike the right balance for the health and welfare of the population. If they bring industry and construction to a halt along with the entertainment and travel sectors already shut down, the resulting recession could inflict lasting damage on their economies; if they do not, commuters and workers could fall ill and continue to spread the virus, prolonging the health crisis and the economic downturn.

The response to the pandemic has varied to some extent across Europe, dependent partly on differences in political culture and regulatory and enforcement