GEOFFROY VAN DER HASSELT | AFP | Getty Images
LONDON — The European Central Bank is sticking to its growth projections despite new coronavirus restrictions across Europe that could further dent business activity and output.
“I think our last projections in December are still very clearly plausible,” President Christine Lagarde said at a Reuters event on Wednesday.
In December, the bank estimated a 3.9% GDP (gross domestic product) rate for 2021, after a contraction of 7.3% in 2020. The official and final reading for 2020 is not yet known.
However, since the publication of these forecasts last month, many European governments have announced tough new lockdowns or an extension of existing restrictions.
The Netherlands announced Tuesday a lockdown until Feb. 9. Germany, in lockdown since November, is considering extending it for another eight to 10 weeks. Austria remains closed until late January. France has intensified its curfew and Portugal is contemplating a new lockdown too.
What would be a concern would be that after the end of March, those member states still need to have lockdown measures.
These measures follow an uptick in cases and deaths from Covid-19 since the Christmas period, in some cases the new figures are worse than during the first wave in the spring of 2020.
“Significant restrictions will remain in place well beyond January. In some countries, a gradual re-opening may start at some time in February. In others, that may not happen before March,” Florian Hense, a euro zone economist at Berenberg, said in an email on Wednesday.
However, the main concern for Lagarde is what happens after March.
“What would be a concern would be that after the end of March, those member states still need to have lockdown measures and if, for instance, vaccination programs were slowed down,” Lagarde said, according to Reuters.
The longer the lockdowns continue, the greater the impact on the economies that share the single currency.
The euro zone began vaccinating citizens just before 2020 came to an end, but the rollout has been embroiled in some controversy. Critics argue that the deployment of Covid-19 jabs has been too slow, and that there aren’t enough vaccines.
However, the European Commission — which has negotiated contracts with vaccine manufacturers — has denied these accusations.
Lagarde’s ECB has, from the start of the pandemic, announced unprecedented emergency measures to support the euro area. Its bond-buying stimulus program (PEPP) is currently set to last until March 2022, totaling some 1.85 trillion euros ($2.25 trillion).
Speaking Wednesday, Lagarde said the ECB could extend this program once again if needed.