Bank of Portugal Vice Governor: EU Recovery Fund Backs Expectations of Growth Soon

14 April 2021

By David Barwick – FRANKFURT (Econostream) – The Next Generation EU recovery fund is reason to think Europe will soon return to economic growth, Bank of Portugal Vice Governor Luís Máximo dos Santos said Wednesday.

In an article for Views - the Eurofi Magazine, dos Santos wrote that ‘the approval of an unprecedented volume of European funds to support the recovery of the European Union’s economies, a large part in the form of straight grants, gives credence to forecasts for growth in the near future.’

The campaign to vaccinate people against Covid-19, ‘notwithstanding its difficulties and setbacks, has changed expectations for the better, giving a feeling of hope even to those sectors most affected by the pandemic, that is, those that depend more directly on people’s mobility’, he said.

However, for now ‘we are hostages to the health situation and developments in the pandemic’, he said. ‘This means therefore that we are in a situation of high and atypical uncertainty’, also around the recovery envisioned occurring this year and in 2022.

Europe’s banks are in a much better position to resist stress, but ‘[e]ven if the most optimistic scenarios come to fruition, the near future will be very demanding for the European banking sector’, he said. ‘The pressure on profitability and asset quality, for example, will be high.’