The euro-zone economy is doing better than many expected given that much of the hospitality and travel sector is still closed due to virus-related restrictions. Indeed, the latest business surveys suggest that manufacturing output is growing at a near-record pace. However, this rebound is from a very subdued level and the services sector is still hobbled by Covid-19 restrictions. Overall, we do not expect the euro-zone economy to expand at all in Q2. That said, despite multiple regulatory and logistical problems, the pace of vaccinations has picked up somewhat over the past month. Our best guess is that 50% of adults will have been vaccinated by the end of July. That would allow most restrictions to be lifted during the summer and would pave the way for a sustainable economic rebound.
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