European Central Bank (ECB) President Christine Lagarde says the eurozone economy has shrunk by 3.8% in the first quarter of this year and says there may be worse results in the future. The Guardian reports.
“Due to the coronavirus and the declared state of emergency, the eurozone economy has shrunk at an unprecedented rate,” he said, adding that it was necessary to encourage bank loans and keep financial markets afloat.
The central bank predicts that the eurozone economy as a whole could shrink from 5% to 12%, and Lagarde called on eurozone politicians to support ambitious financial aid packages to ensure economic recovery.
According to Lagarde, France and Italy, the second and third largest economies in the eurozone, are not in recession, and according to the European Union’s statistical agency Eurostat, the largest decline in GDP was recorded in these countries.
According to Eurostat, France’s economy shrank by 5.8% in the first quarter of 2020 – the last time the country had such a bad result in 1949. Italy’s economic growth rate was -4.7%.
As for Spain, the third most affected country in the European Union, its economic decline was 5.2%, Belgium – 3.9%, and Austria – 2.5%.
According to the publication, Germany’s quarterly data has not yet been published, with preliminary estimates that the largest European economy may shrink by 6.3% this year.
It is noteworthy that against the backdrop of restrictive measures and universal quarantine adopted in the first quarter, the eurozone economy is expected to shrink further in the second quarter.