European countries are strengthening their efforts to fight COVID-19. Measures ranging from quarantine and business closures to working from home and self-isolation will hit GDP, which has been revised by analysts at ANZ Research.
Key quotes
“If it is assumed that restrictions will last for four weeks and activity will then take time to normalise, it is feasible to estimate that euro area GDP could fall by 2.5% in 2020.”
“Our GDP profile involves a precipitous decline in late Q1 and Q2 before a gradual normalisation in activity in the second half of the year.”
“Our current estimate of the downside risks imply the economy should contract by 2.5% in 2020. A reasonable rule of thumb is that for every week the EU economy operates at 50% of normal engagement levels, GDP will fall by 0.5%.”
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