COVID-19: IMF Expects Deep Recession in Europe

The International Monetary Fund estimated on Monday that a “deep recession” in 2020 on the European continent was “a given” due to the serious economic consequences of the pandemic due to the coronavirus.
“In major European economies, non-essential services closed by government decree account for about a third of production,” said IMF director Poul Thomsen in a blog post.

“This means that each month that these sectors remain closed, this translates into a 3% drop in annual GDP,” he added, stressing the “amazing ferocity” with which COVID-19 hit Europe. .

On the euro zone in particular, Mr. Thomsen believes that “the determination of [its] leaders to do what is necessary to stabilize the euro should not be underestimated”, at a time when critics are blowing up on the incapacity of the countries Europeans to show solidarity in the face of the crisis.

He considers “particularly important” the “large-scale” intervention of the European Central Bank, as well as “the call launched by European leaders for the European Stability Mechanism [MES, the euro zone relief fund, editor’s note] complements national budgetary efforts ”.

This will, he continues, “ensure that countries with high public debt”, for example Italy, a country particularly affected by the epidemic, “have the fiscal space they need to react energetically to the crisis ”.

The “main concern” of the IMF “at this stage” concerns rather “small countries outside the EU”, explains Poul Thomsen.

“With the exception of Russia and Turkey, most of the nine emerging non-EU Central and Eastern European emerging economies have already requested emergency assistance through the IMF’s rapid financial support mechanisms,” thus joining “more than 70 other member countries in the world”.

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