The resurgence of the coronavirus carries a serious risk for European countries, the European Central Bank (ECB) feared. The head of the organization, Christine Lagarde, promised economic assistance to the region and urged governments to do the same, Bloomberg reports.
“The renewed surge in the incidence of COVID-19, mutations in the virus and strict containment measures pose a significant risk of reduced economic activity in the eurozone,” she concluded.
Earlier in an interview with the Journal du Dimanche, Lagarde indicated that a return to the dock level of economic activity in the region should not be expected until mid-2022. According to her, economic growth will begin by the middle of this year, but uncertainty still persists: in 2021, GDP growth should be expected by 4 percent or less.
At the end of January, business activity in the EU countries began to decline amid new locks and restrictions. In addition, the situation is complicated by fears that vaccinations against coronavirus will not go fast enough. In January 2021, the business activity index (PMI) fell to a two-month low (47.5 points), this happened amid the introduction of stricter restrictions in countries due to COVID-19. Chris Williamson, chief economist at IHS Markit, which calculates the index, said that at this rate, a double recession in the eurozone is becoming more inevitable.
With the onset of the crisis due to the coronavirus pandemic, the ECB launched a large-scale quantitative easing program (buying government bonds from banks to lower rates on them and provide the banking system with additional liquidity), the total volume of which will reach 1.85 trillion euros. In parallel, the EU authorities agreed to create a fund of 750 billion euros. The money will go to help the countries most affected by the pandemic.