The European Central Bank (ECB) expects the European economy to suffer a more severe recession than the global economy. Countries across the euro area will experience “a deep recession,” which entails unprecedented funding needs of more than €1 trillion ($1.1 trillion), explained ECB Vice President Luis de Guindos.
Also read: IMF Declares Global Recession, 80 Countries Request Help, Trillions of Dollars Needed
Deep Recession, Shrinking Economy
ECB Vice President Luis de Guindos answered some questions about the European economy in an interview published by the ECB on Sunday. Sharing his assessment of the global economic situation as the coronavirus crisis persists, he said:
The global economy will enter recession and so will the European economy, albeit an even more severe one. The ultimate fall in GDP will depend on how long the lockdown lasts.
He added: “International bodies have calculated that the economy will shrink by 2% to 3% for each month of lockdown. So one and a half months would be around 5%. Three months would be double that.”
He believes that in the most likely scenario, the euro area will show some signs of growth beginning in the third quarter. However, “we will have to wait until 2021 to see a genuine recovery in economic activity,” he emphasized. “In any case, 2021 will not be able to make up for all of the downturn in 2020.” The ECB vice president continued:
The banking sector is facing this situation from a much more robust position than ten years ago. It is true that it has profitability issues and the deep recession will affect its bottom line.
“But there
