ECB Bulletin: Activity still well below pre-crisis levels

Thursday, 24. September 2020 10:04

The European Central Bank published on Thursday the sixth issue of its Economic Bulletin, confirming the decision taken by the Governing Council to keep its accommodative monetary policy stance unchanged. The ECB reiterated that the primary source of uncertainty for the global economy continues to be the coronavirus pandemic, warning that activity has remained "well below" the pre-crisis levels.

"Risks to the global outlook remain skewed to the downside given the persistent uncertainty about the evolution of the pandemic, which may leave lasting scars on the global economy," the ECB said in its report, while also mentioning other influential events such as Brexit, rising trade protectionism and disruption of global supply chains.

The bank confirmed that the Eurozone's real GDP contracted by 11.8% in the second quarter of the year compared to the last trimester, claiming the GDP figures will improve in the third three-month period. At the same time, it projected the euro area's annual inflation at 0.3% in 2020, 1% in 2021 and 1.3% in 2022. The general government budget deficit in the Eurozone is expected to surge to 8.8% of GDP in 2020.

"An ambitious and coordinated fiscal stance remains critical, in view of the sharp contraction in the euro area economy, although measures should be targeted and temporary," the ECB stated, adding that "an ample degree of monetary accommodation is necessary for the robust convergence of inflation to levels that are below, but close to 2% over the medium term."

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