April 19, 2010
The economic impact of the volcanic cloud halting flights across Europe will increase sharply the longer disruption continues, forcing holiday cancellations, delaying deliveries and reducing jet fuel demand.
African exporters of flowers and vegetables by air to European supermarkets, technology companies relying on “just-in-time” deliveries of components, event organisers and others could all feel the pinch.
Economists say so far they have not changed their models or predictions for European growth, hoping normal service could resume this week. But in a worst-case scenario in which the ash cloud closes European airspace for months, one economist estimates lost travel and tourism revenue alone could knock 1-2 percentage points off regional growth as long as it lasts. European growth had been predicted at 1-1.5 percent for 2010.
“That would mean a lot of European countries wouldn’t get any growth this year,” said Vanessa Rossi, senior economic fellow at Chatham House. “It would literally stifle the recovery. But the problem is it is incredibly hard to predict what will happen. Even the geologists can’t tell us.”
This article was posted: Monday, April 19, 2010 at 4:24 am