Euro zone: recovery in Q1 2021 probably weaker than expected, warns IMF

2020-11-30T20:02:13.276Z

The International Monetary Fund warned on Monday that the second wave of Covid-19 infections was likely to result in a weaker than expected recovery in the euro area in the first quarter of 2021 " unless the dynamics of the pandemic change radically in the months to come ”. In its annual report on the euro area, the IMF notes that the second wave of the virus " poses a considerable risk for the r

The International Monetary Fund warned on Monday that the second wave of Covid-19 infections was likely to result in a weaker than expected recovery in the euro area in the first quarter of 2021 "

unless the dynamics of the pandemic change radically in the months to come

”.

In its annual report on the euro area, the IMF notes that the second wave of the virus "

poses a considerable risk for the recovery

He adds that "

the outlook is subject to extreme uncertainty

Read also: Faced with a sluggish recovery, the IMF urges the G20 for more cooperation

For now, he nevertheless believes that they are "

clearly

" on the decline until the beginning of next year.

Last October, the IMF unveiled a forecast for growth of 5.2% in the euro zone in 2021, less than what it had hoped for last June.

The Washington institution notes that the second wave, which was accompanied by new restriction and containment measures, damaged confidence and further reduced the mobility of populations.

Read also: Covid-19: nearly 900 billion euros in moratorium loans in Europe

It also warns against the delay in the implementation of the recovery plan, a brake on the recovery, while in addition the negotiations underway on the future relations of the United Kingdom with the European Union and "

a possible escalation trade tensions add to the uncertainty

”.

As it has done for months, the Fund recommends not only not to withdraw budget support too early but to consider “

even more budget support

” if the outlook deteriorates further.

He acknowledges, however, that "

for some countries with already high indebtedness, providing the necessary budget support alongside the realization of large contingent liabilities, could lead to adverse market reactions

Finally, the institution calls on countries to tackle inequalities: the pandemic has hit hardest people who are already economically and socially fragile.

The risk is that the recovery will also be unequal.

“

Targeted policies will be necessary to protect vulnerable regions and prevent rising inequalities, paying particular attention to young people and disadvantaged groups

,” underlines the IMF.

Source: lefigaro

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