Coronavirus : strong headwinds ahead in Europe

5th March 2020
-IAM, News

Hugues Chevalier, Economist

Since the pandemic outbreak in Italy these last days, production is almost on halt in Italy. Indeed, the regions of Northern Italy (Lombardy, etc.), affected by the outbreak, produce more than 40% of the Italian GPD. After the contraction of the GDP during the last quarter of last year, the perspectives for 2020 are now very gloomy and a recession seems inevitable for the peninsula. The consequences for the other European countries could be massive since Northern Italy counts among the most industrial regions in Europe. Germany will be particularly hit if intra-European trade is on halt due to confinement measures, because its economy depends more on international trade than other. Financial markets were not mistaken about the risks linked to this health crisis and have recorded heavy losses these last days. However, this crisis, as others before it, will be overcome, sooner or later. Therefore, acting in panic would be the worst thing to do.