icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm

Eurozone economy heading for ‘sharp decline’ of 13%, ECB warns

Eurozone economy heading for ‘sharp decline’ of 13%, ECB warns
The head of the European Central Bank (ECB), Christine Lagarde, has warned of a major economic downturn for the European Union, leading to a surge in unemployment.

The “EU economy is experiencing a dramatic fall”, Lagarde told EU leaders during a video conference, according to Reuters.

Lagarde said the eurozone was heading for a “sharp decline” of some 13 percent in the second quarter, and reiterated the bank’s forecast of an 8.7 percent GDP drop in 2020 and a rebound of 5.2 percent in 2021.

Also on rt.com European Central Bank warns coronavirus response could raise fears of eurozone breakup

According to the ECB chief, the full economic impact from the pandemic has not yet been reflected in the labor market, and unemployment in the 19-nation eurozone could reach 10 percent.

She noted that financial markets were relatively calm due to expectations that the bloc would act to show that “the EU is back” in action.

READ MORE: German economy may shrink by over 9% this year due to coronavirus crisis

The ECB said last month that the economic impact of the Covid-19 pandemic has been significant, increasing the underlying financial vulnerabilities of single currency area. It indicated that the euro governments’ vast fiscal response to the pandemic could raise questions over their ability to repay debts, and could revive the threat of countries leaving the euro.

For more stories on economy & finance visit RT's business section

Podcasts