Europe’s Summer of Recovery Is More Fragile Than It Looks

ALBUFEIRA, Portugal — Until last week, Raissa Moura and her co-workers at the reception desk of the Pine Cliffs Resort were feeling optimistic that life was returning to normal along Portugal’s Mediterranean coast.اضافة اعلان

The previous year, as the pandemic halted travel, they had fretted over the desolation of the usually bustling, 1,300-bed hotel and villa complex. They had suffered layoffs and worked weeks on end inside an eerily quiet lobby processing cancellations. Outside, foxes brazenly wandered the abandoned grounds.

But this summer was already shaping up nicely in the Algarve, Portugal’s leading tourist destination. Cases of COVID-19 had dropped so dramatically that Britain had designated Portugal a so-called green country, permitting its citizens to visit without having to quarantine on return. The sun loungers arrayed beneath the pine trees were full of people hoisting cocktails. The resort’s eight swimming pools echoed with the sounds of splashing children.

“It feels hopeful,” Moura, 28, said on a recent afternoon. “The resort is alive again.”

But the next day, London jolted Portugal by revoking its green-country status, citing a troubling rise in cases. Moura and her colleagues braced for another surge of cancellations. Along the coast — from seaside palapas to cliff-top restaurants to car rental lots — people whose livelihoods depend on tourists abruptly started to prepare for another lost summer.

“People were like, ‘Here we go again,’” Moura told me the day after the news broke.

I traveled here from London in early June to report what was supposed to be a story about a country reopening to the world, a heartening example of Europe finally recovering from the economic catastrophe that has accompanied the worst pandemic in a century. Portugal had absorbed the worst of Europe’s double-dip recession in the first months of this year after imposing strict curbs on economic life to choke off the virus. Now it was poised to harvest the reward and recover faster.

But the story of Portugal’s unfolding summer turns out to be a tale of the pandemic’s stubborn endurance and the volatile nature of expectation as the virus undercuts plans to recommence ordinary life. Despite signs of progress, no one knows what will happen next — in Portugal, across Europe and throughout the global economy. The ambiguity is forcing businesses and families to tread carefully, putting off investments, delaying plans to travel and deferring decisions while waiting for elusive certainty — a state of mind that could itself perpetuate the downturn.

Ever since the pandemic emerged, policymakers in wealthy countries have depicted lockdowns as an effort to halt the spread of the coronavirus. Governments cushioned affected workers while waiting for the public health threat to recede. Eventually, the thinking went, they could safely turn the economy back on.

Portugal’s season of doubt underscores how economies do not come with built-in power buttons. Resorts are struggling to hire seasonal labor because workers are reluctant to risk traveling to the region so long as future closings remain possible. Local workers are cautious with their money. Resorts are putting off upgrades, depriving construction workers of jobs. Potential visitors must navigate the complexity of changing government policies on quarantine and testing requirements.

“It’s not a simple switch on and off,” said the general manager of the Pine Cliffs Resort, Thomas Schoen. “It’s been a stop and go all the way along the line.”

The big picture in Europe is increasingly positive. After fumbling the initial phase of the vaccination campaign, Europe has achieved momentum, allowing governments to ease restrictions. Shops have reopened in all 27 nations of the European Union, while cafes and restaurants are permitted to serve outdoors. Economic activity in the service sector has soared.

Economists expect that the 19 nations that share the euro currency will see robust economic expansion this year — a rate of 4.2%, according to a recent forecast from Oxford Economics.

Central to the optimism is the reality that Europeans are increasingly on the move, portending a potentially lucrative summer tourist season.

Within the eurozone, the use of public transportation increased in May, reaching 72% of its pre-pandemic level, according to tracking data compiled by Jefferies, a financial services company. Flight activity edged up to 28% of its level before COVID-19, and visits to accommodation booking websites leapt to 110% of its pre-COVID level, up from 40% in December.

Countries that are heavily reliant on tourism appeared likely to benefit, among them Greece, Italy and Spain. None was better placed than Portugal, where — before the pandemic — tourism made up nearly one-fifth of overall economic activity, according to government data.

During the first three months of the year, as the government imposed a lockdown, Portugal’s economy contracted by an alarming 3.3% compared with the last quarter of 2020 — far worse than the 0.6% slide experienced by the eurozone.

The pain appears to have yielded a substantial gain: From January to May, Portugal’s new COVID cases plunged to less than 200 a day from more than 15,000.

“We are already starting to see a better public health picture, and so things are also improving in the economic picture,” said Ricardo Amaro, a senior economist at Oxford Economics.

Britain’s decision to list Portugal as a green country was especially significant. The British traditionally flock to Portugal as a respite from their often dreary weather, much as New Yorkers use Florida to escape winter.

Portugal received more than 2 million visitors from Britain in 2019, according to the national tourist board. Only neighboring Spain sent more.

In the Algarve — a seaside empire of villas, resorts and golf courses — the region’s unemployment rate sits stubbornly above 10%, compared with 7.1% for Portugal as a whole. The reawakening of tourism was supposed to fix that.

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