US, WASHINGTON (ORDO NEWS) — The eurozone economy has experienced a “sharp drop in GDP” and a “rapid worsening of the labor market situation” amid the COVID-19 coronavirus pandemic, said Christine Lagarde, chairman of the European Central Bank (ECB).
“Uncertainty is very high and will remain high, which makes it extremely difficult to predict the potential scale and duration of the inevitable recession, as well as the subsequent economic recovery,” said Lagard prepared for the traditional spring meetings of the International Monetary Fund (IMF) and the World Bank, which This year passed in an online format.
According to Lagarde, inflation in the eurozone is low amid a collapse in oil prices, and is likely to continue to weaken in the near future. Medium-term expectations for consumer price growth in the eurozone are “extremely uncertain,” she said.
According to the IMF forecast released earlier this week, Eurozone GDP will decline in 2020 at a record pace of 7.5%. Next year, the region’s economy will grow by 4.7%, the IMF expects.
In response to the crisis caused by the coronavirus pandemic, the ECB announced its intention to increase the repurchase of bonds by almost 900 billion euros this year, to provide trillions of euros to banks in the form of cheap loans, as well as to soften loan collateral requirements to facilitate financial companies’ access to liquidity.
Isabelle Schnabel, who is responsible for market operations at the ECB, said on Thursday that the measures taken by the Central Bank helped “stabilize financial conditions in the eurozone, improve market liquidity and reduce volatility.”
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