The European Central Bank has reduced its growth and inflation projections for this year and expects the single currency the economy a strong decline in the feline corona virus, or Covid-19, will adversely affect economic activity, is severely.
President of the ECB, Christine Lagarde, has presented all the ECB staff macroeconomic projections on Thursday, during his post-decision press conference.
For this year, the ECB staff projected a growth of 8.7 per cent contraction, against 0.8 per cent growth seen in the previous part of March.
However, the growth projections for the next two years were raised. The growth outlook for 2021 has been increased by 5.2%, from 1.3%, and the forecast for 2022, he has been raised to 3.3 percent from 1.4 percent.
The inflation projections for the next three years were lowered to the middle of lower energy prices and a projected increase in the net economic slowdown. The forecast for this year has been reduced to 0.3 percent from 1.1 percent.
The outlook for next year was lowered to 0.8 percent from 1.4 percent and the projection for 2022, it had eased to 1.3 percent from 1.6 percent.
The June Eurosystem macroeconomic projections, the growth is declining at an unprecedented rate in the second quarter of this year, before rebounding again in the second half, especially helped by the substantial support from fiscal and monetary policy, christine Lagarde, said in his introductory statement at any time.
“Overall, the Governing Council sees the balance of risks surrounding the outlook to the downside,” Lagarde said.
In the first quarter, the euro area has decreased by 3.8% compared to the previous three months.
“The ECB, the staff had projected 13% drop in the second quarter. The economy is expected to recover somewhat in the third quarter, as the moment when the restrictions are removed.
The slogan is surrounded by an exceptional degree of uncertainty,” she said.
Therefore, the ECB staff presented two scenarios, light and serious.
In the mild scenario, the “economic shock” of the Covid-19, it is considered temporary, with a rapid and successful containment of the virus, which allows the restrictions to be removed quickly. In addition, any resurgence of the virus has been seen in this.
Under this, the real GDP would decline by 5.9% this year, followed by a strong rebound in 2021. By the end of the horizon, the real GDP would be almost to reach the level of the March 2020 and with the staff projections. Inflation is seen to rise to 1.7% in 2022.
In The severe scenario, with a strong resurgence, or infections, requires a more stringent containment measures that will significantly weigh on economic activity.
Under this, the real GDP is seen crashing 12.6 per cent by 2020, and, by the end of the projection horizon, that is around 91/2 per cent below its level of March of the year 2020, with projections, the inflation rate at only 0.9% in 2022.
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