S’AGARO in Spain (Reuters). The recovery of the eurozone economy has been steady but is now facing a challenge from a surge in coronavirus and a new variant. This was stated by two European Central Bank policymakers on Friday.

International investors and officials reacted to Friday’s detection of a new coronavirus type in South Africa with concern. Britain and the European Union tightened their border controls, as research sought to discover if this mutation is vaccine resistant.

Luis de Guindos, an ECB policymaker, and Ignazio visco, a policymaker at the bank, stated that pandemics are a reason for concern.

Visco said, at an event, that uncertainty remains high due mainly to a health condition that has once again been a source of considerable worry.

Markets fell steeply on Friday and investors were reluctant to increase their rates. This was due to concerns that the new variant might be immune-suppressible and more transmissible. [MKTS/GLOB]

Although no rate rise has been announced by the ECB for next year, there is widespread expectation that it will end its Pandemic Emergency Purchase Programme (PEPP), which cost 1.85 trillion euro ($2.1 trillion) in March.

Visco claimed that there has been an increase in infection rates in Europe over the past week, and this is threatening the post-COVID outlook.

Vice-president of the ECB, De Guindos also pointed out the challenges presented by the new variant and rising cases, as well as supply shortages. However, he maintained a positive tone.

At a Spanish event, de Guindos said that vaccines are a unique factor. “I think that the impact on the economy will be limited. I consider myself to be optimistic.”

He said that the economy was able to adapt to the pandemic, and forecasted that the economy will grow at a rate of around 5% in this year’s economic growth and even more next year.

($1 = 0.8862 euros)