The euro-area economy could shrink as much as 12% this year and fail to return to its pre-coronavirus size until the end of 2022, according to the European Central Bank. In a range of scenarios published on Friday, a day after it announced more measures to help banks fund companies and households, the ECB predicted an uncertain recovery from the crisis. Gross domestic product might rebound by only 4-6% next year.
The report is the latest to show how early predictions of a strong rebound in the second half of the year have given way to uncertainty over the timing of the recovery, as countries plot different paths to ease lockdowns.
“Ultimately, rapid and decisive containment and economic policy measures — besides an effective medical solution — will be crucial to ensuring a robust recovery of economic activity,” the central bank said in a pre-release of its May Economic Bulletin.