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As if the slowdown in global trade was not taxing enough on the Eurozone economy, the latter now has to face COVID-19. An already-feeble Eurozone will be among the worst hit by virus-related production shutdowns, therefore, the National Bank of Canada has updated its forecast for the Eurozone and the shared currency. 

Key quotes

“The zone’s tourism sector will also struggle as visitors cancel travel plans amid the virus scare. Trade tensions between the European Union and the U.S. as well as Brexit-related complications threaten to make an already difficult situation worse.” 

“In light of virus-related deterioration in the eurozone’s economic outlook, we have lowered our GDP growth forecast for the common currency area to just 0.6% this year.”

“While there’s room for fiscal stimulus to support growth, particularly in Germany and the Netherlands, we’re not holding our collective breath as European governments have shown little interest in recent years for fiscal boosts.”

“Amid the increased likelihood of ECB intervention, we have lowered our targets for EUR/USD, the latter now expected to reach 1.03 by year-end.”