Even if the coronavirus outbreak ends quickly, the disruption in the supply chain will affect trade, tourism and confidence, with repercussions for the entire global economy, Klaus Regling, Director of the European Stability Mechanism (ESM) for the eurozone said on Monday.
“Downside risks do exist,” the German acknowledged at the end of a meeting of eurozone finance ministers that addressed the issue.
He noted that many analysts are revising their growth forecasts for China and other Asian economies downwards and now expect negative growth for the first quarter.
“Banks and analysts don’t know how long the problem will last, but even if it ends quickly, the disruption in the supply chain will affect trade, tourism and confidence, with repercussions for the entire global economy,” he commented.
“The scale of the challenge will depend on the duration of this outbreak, but the first quarter will be problematic for many Asian countries,” added Regling, who heads the European financial crisis management facility for the eurozone.
Eurogroup President Mario Centeno noted that the EU does not have as much information as it would like to assess the impact of this epidemic.
“We have some uncertainty, and uncertainty in itself is not good for the economy. We are closely monitoring the situation. We hope it will be temporary, with temporary effects for our economy,” he said.