In ECB’s bulletin published today, three scenarios of the economic impact of coronavirus pandemic are presented. In the severe scenario, GDP contraction could trough by -15% in Q2. Foreign demand could contract -19% this year, without returning to pre 2019 level until end of 2022.
In the mild scenario, strict lockdown is relatively short-lived, ending the course of May 2020. There will be a gradual return to normal activity thereafter and only temporary economic losses. In the medium scenario, strict lockdown also ends in May, but it’s followed by relatively stringent and protracted containment measures. Return to normal activity is delayed and output losses persists. In the severe scenario, a longer term strict lockdown period ends in the course of June. Ongoing tough containment measures will remain in place. That will significantly dampen activity across sectors of the economy until a vaccine is available, not until mid 2021.
Eurozone foreign demand will fall by around -7%, -11% and -19% in 2020, under the mild, medium and severe scenarios respectively. Foreign demand would not return to pre 2019 level before end of 2022 under the severe scenario. GDP is expected to contract by -5%, -8% and -12% under the three scenarios. Annual figure under the severe scenario reflects a quarter trough of around -15% in Q2, followed by a protracted and incomplete recovery.
