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Economic developments and outlook for contact-intensive services in the euro area

Author

Listed:
  • Andersson, Malin
  • Battistini, Niccolò
  • Stoevsky, Grigor

Abstract

This box assesses the recent dynamics and outlook for economic activity in more contact-intensive services in the euro area, which were particularly adversely affected by the pandemic. Following the marked deterioration during the initial phase of the COVID-19 pandemic, value added in those services rebounded strongly in the second and third quarters of 2021, while remaining well below its pre-pandemic level. The ample slack in these subsectors is also confirmed by the significant role of demand as a factor limiting activity, which in turn appears to be affected by pandemic restrictions. The gradual resolution of the public health crisis and the ensuing reopening of the economy are expected to support a continued recovery in more contact-intensive services. In the medium term, structural factors, such as changes in households’ preferences and working arrangements, will also play a role in shaping the recovery path of consumer services. JEL Classification: E22, E32

Suggested Citation

  • Andersson, Malin & Battistini, Niccolò & Stoevsky, Grigor, 2021. "Economic developments and outlook for contact-intensive services in the euro area," Economic Bulletin Boxes, European Central Bank, vol. 7.
    • Handle: RePEc:ecb:ecbbox:2021:0007:5
    Note: 427284
    as

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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2021/html/ecb.ebbox202107_05~9d4efa40bc.en.html
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    More about this item

    Keywords

    business cycle; containment measures; COVID-19; Services;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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