ECB President Christine Lagarde told European Union ministers that she
expects the eurozone to diminish by 15% as a consequence of the
coronavirus outbreak, Bloomberg reported.German chancellor Angela Merkel
indicated that the EU bloc should double the 540 billion euro ($665
billion) economic stimulus agreed on two weeks ago.Initially in April,
the IMF predicted that the eurozone area would contract by 7.5%, before
it revives to a projected growth level of 4.7% in 2021.Visit Business
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The President of the European Central Bank Christine Lagarde told
the region's leaders that the eurozone economy could shrink even further
than previously expected, Bloomberg reported. Speaking to the EU's 27
heads of government via a video-conference on Thursday, Lagarde warned
of a 15% contraction to the eurozone's GDP as a direct consequence of
the pandemic, the news agency said.She also told the leaders they risk
“doing too little, too late,” while discussing how to mitigate the
economic fallout from the virus, Bloomberg said, citing sources.The ECB
declined to confirm this report to Markets Insider on the basis of
confidentiality.Read more: Credit Suisse outlines 5 reasons why stock
traders should buy any dip that transpires this year — even as the
market grapples with the coronavirus
Officials on the call said that the 15% was an extreme scenario,
Bloomberg said, while the ECB president said her baseline estimate would
be a 9% cut in output this year. After hearing the catastrophic message
of the outlook from the president, German chancellor Angela Merkel told
the region's leaders that she would back a huge stimulus package to
rebuild the eurozone.EU leaders had agreed on a 540 billion euro package
of economic stimulus two weeks ago, but Merkel indicated that the bloc
should now double the rescue plan drawn up by finance ministers,
Bloomberg said.Earlier this month, Lagarde had said it would be
“extremely difficult” to predict how long an imminent recession would
last and how deep the effects of an economic downturn would be. In a
statement to the International Monetary and Financial Committee, she had
pointed to a “large contraction” in output for the euro area, and a
rapidly deteriorating job market. The IMF had predicted earlier in April
that the eurozone area would contract by 7.5%, the most damaging
recession the monetary union has suffered. It also laid out a growth
forecast of 4.7% for 2021 as the continent's economy rebounds from the
virus.
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