Volcanic Ash Muffles Economic Recovery

While airlines are resuming operations after disruptions from the Eyjafjallajokull volcano, there is still potential for long-term air travel disruption in Europe. The last time the volcano erupted, in 1821, it was active on and off for two years.

In an article on CTV.ca, Eric Reguly says that according to economists, the longer the volcano releases ash, the greater the economic danger. While manufacturers would eventually adapt to missing air freight deliveries by picking up the slack with trucks and trains, says the article, tourism could be more seriously affected.

In Britain, supermarkets were concerned some fresh foods would be missing if imports from Africa and Asia couldn’t be delivered. Flower shops had similar concerns of their imports from Kenya.

Marco Annunziata, economist in London for Italy’s UniCredit bank, said that if the disruption recurs over a period of months, “the damage to the tourism industry might be substantial, as it would remain mostly dependent on customers from Europe, where the growth outlook is weak.”

To read the article, click here:
http://www.ctv.ca/generic/generated/static/business/article1538687.html