The optimism of the monetary institute contrasts with the gloomy picture drawn up by the IMF on Thursday about the economic paralysis due to the Covid-19.
Christine Lagarde, President of the European Central Bank, spoke on Friday in a virtual forum.
KEYSTONE
The “worst” of the economic crisis caused by the coronavirus epidemic in the euro area is “probably past,” said Friday the president of the European Central Bank, Christine Lagarde.
It is the first time in months that the monetary institute has shown optimism, even cautious, on the issue.
The Frenchwoman, who spoke in the context of a virtual forum, however insisted that the recovery will be “incomplete” and “uneven” and that she will “transform” the economy.
His optimism contrasts with the somber picture drawn up on Thursday by the International Monetary Fund, which sees in particular the countries of the euro zone suffering a severe recession this year (-10.2%), a direct consequence of the economic paralysis to contain the Covid-19 pandemic which led him to plan his forecasts significantly.
“Intense negotiations”
In Europe, an extraordinary summit bringing together the leaders of the 27 EU countries will take place in Brussels on July 17 and 18 to try to find an agreement on the plan to massively revive the European economy, by providing for the creation of a recovery fund of 750 billion euros financed by massive loans.
“I do not think they will reach an agreement” in mid-July, warned the French, seeing “intense negotiations” begin and a “process to continue”.
A preparatory meeting is scheduled for Monday in Germany, where Chancellor Angela Merkel will welcome French President Emmanuel Macron near Berlin, for their first reunion since the start of the coronavirus crisis.
On the menu of their discussions is notably the future EU budget and the draft recovery plan which was largely initiated by the Franco-German couple.
Reluctance of the “frugal”
A big obstacle to overcome in the discussions on the EU recovery plan concerns the reluctance of the four so-called “frugal” countries – Netherlands, Austria, Sweden, Denmark – very reserved with regard to this plan which will benefit before all in the countries of the South, the most affected by the pandemic.
But “what is very special is that, for once, monetary and budgetary policies have worked together” to curb the economic impact of the virus, welcomed the former boss of the IMF.
At the end of the crisis, the economy will have changed, “airlines, hotels and the leisure sector” developing in a “different format”, while “new industries” will emerge, says Lagarde.
In addition, growth in loans granted by euro area banks to the private sector continued at a high pace in May (+ 5.3%, after 4.9% in April), driven by loans to businesses (+ 7.3%) looking for liquidity in the face of the economic crisis, according to figures published in parallel on Friday by the ECB.
In contrast, the increase in loans to households continued to progress at an unstable pace, at 3.0%, as in April.
(ATS / NXP)
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