Christine Lagarde worsens the recession in the Eurozone: GDP will fall between 8% and 12% in 2020

27/05/2020

Christine Lagarde worsens the recession in the Eurozone: GDP will fall between 8% and 12% in 2020

This has worsened the range of the recession expected for the region as a result of the pandemic by ruling out the less negative scenario raised a month ago by the ECB, which estimated a 5% drop in GDP.

The Eurozone economy will suffer a contraction of between 8% and 12% in 2020, as indicated by the President of the European Central Bank (ECB), Christine Lagarde.

“I think the soft scenario, with a GDP drop of 5% in 2020 is already outdated,” said Lagarde during a press conference in which he anticipated that “the Eurozone economy is likely to be between the medium and severe raised by the ECB », which point to a contraction of 8% and 12%.

The ECB will announce its new macroeconomic projections for the Eurozone on June 4, after the meeting of the institution’s Governing Council.

According to the latest forecasts of the entity, the recovery of activity in the euro area would oscillate between 4% and 6% in 2021, according to the different scenarios proposed by the central bank. The ECB anticipates a recovery in the Eurozone’s GDP of between 4% and 6% in 2021.

According to the softer scenario managed by the ECB, which envisages the end of strict containment measures during the month of May and a gradual return to activity thereafter, but which Lagarde already considers outdated, the GDP of the euro area It would record a 5% drop in 2020, which would be more than recovered with the rebound of 6% expected for the activity of the block in 2021.

For its part, in its intermediate scenario, in which strict confinement ends in May, but longer containment measures are maintained, the ECB anticipates a contraction of 8% this year and a recovery of 5% in 2021.

At the same time, under the most pessimistic scenario, with the containment extending until June, followed by strict containment measures, the economy of the euro area would suffer a 12% contraction this year, with a drop in GDP of 15% in the Second quarter, after which quarterly growth of 6% would follow between July and September and 3% between October and December, with annual growth of 4% in 2021.

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