No European country is escaping the economic consequences of the coronavirus, but the pain won’t be divided equally, writes Jack Ewing in The New York Times. While European economies that depend on tourism, small businesses and supply chains may suffer the most. At the other end may be Estonia, he adds.
According to The New York Times, Southern Europe, which bore the brunt of the last big economic crisis, will suffer the most. Countries like Greece and Italy depend heavily on tourism and are still suffering the lingering effects of the eurozone debt meltdown over the last decade, including austerity programs that left their health care systems ill prepared for a pandemic.
"But even countries regarded as paragons of competitiveness, like Germany and the Netherlands, may turn out to have weaknesses that, until a few weeks ago, were regarded as strengths," Ewing writes and explains: "Germany’s automakers, for example, have dominated the luxury car business. But the virus exposed their dependence on sales in China, and now they are closing factories all over the region."
In Ewing's words, any country with lots of small firms and self-employed people will suffer as well, because these businesses typically have thinner financial reserves to survive a sudden plunge in sales. Greece and Italy are examples, but so is the Netherlands. Other countries may have hidden strengths. An economy with lots of companies that can deliver their services digitally, and where employees can work from home, should be relatively resilient. This could be Estonia’s moment; its capital, Tallinn, has a lively digital start-up scene.
He continues: "The tiny Baltic nation, population 1.3 million, has one of the most dynamic economies in the eurozone. Growth last year was more than 4 percent, unemployment is less than 5 percent, and government debt is negligible, allowing plenty of room for fiscal stimulus.
Estonia is known as one of the most tech-savvy countries in the world, potentially a big advantage as the outbreak forces economic activity online. The software for Skype was written in Tallinn. Bolt, a ride-hailing, electric scooter and delivery service that is challenging Uber, is based there. But as the virus spreads, Estonia must also take care to protect those who haven’t shared in the boom: More than a fifth of the population lives in poverty."
This is an extract of an article originally published in The New York Times.