The eurozone economy will rebound this year provided lockdown measures curb the Covid-19 pandemic, according to European Central Bank President Christine Lagarde.
Speaking earlier today, Lagarde highlighted the importance of easing lockdown restrictions and delivering successful vaccination programmes, conceding that early rollouts had posed challenges.
Last month, the ECB predicted economic growth of 3.9 per cent this year between the 19 countries that share the euro, based on a gradual end to the pandemic.
Their December forecasts had assumed enough levels of herd immunity would be reached before the end of 2021.
However, resurgent Covid-19 cases and increasingly widespread restrictions to movement and activity in countries across Europe, along with the slow rollout of vaccines, is challenging that outlook just two weeks into 2021.
“I think our last projections in December are still very clearly plausible,” Lagarde said in an interview at the Reuters Next conference.
“Our forecast is based on lockdown measures until the end of the first quarter. 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 programmes were slowed down,” she added.
Private sector economists are already cutting their growth projections, with Bank of America now predicting a 2.9 per cent expansion, a full percentage point below its previous forecast.
To support the economy throughout the pandemic, Lagarde’s central bank extended its bond-buying program to March 2022 when it last updated stimulus in December.
Lagarde said the ECB could expand this programme again if needed but might refrain from using the entire €1.850tn euro envelope it has earmarked for purchases if the crisis passes.