Global Central Banks Photo: Finimise

COVID-19: What central bankers see, say on global economic outlook

*New Coronavirus-related restrictions being introduced across Europe will add to uncertainty for firms and households, says Christine Lagarde, President of European Central Bank

Isola Moses | ConsumerConnect

Sticking to a gloomy tone over certain disruptive measures that could further hinder a recovery, global central bankers are under no illusion that they’re through the fallout from the resurgence of the novel Coronavirus (COVID-19).

The central banks’ chiefs have issued fresh warnings about new government restrictions, struggling recoveries and threats to jobs in several economies across the world, reports Bloomberg.

Repo says the monetary chiefs from the Euro area, Japan and the United Kingdom (UK) were united in their concern about their economies in an online seminar hosted by the Group of 30.

They all said risks to the outlook remain to the downside and signalled support is going to be needed for some time.

Governor Haruhiko Kuroda of the Bank of Japan even warned that his economy is at risk of a recession if things turn sour.

Kuroda said: “Japan is likely to follow an improving trend. However, this outlook is highly uncertain.

“If growth expectations drop and the financial system becomes unstable, the economy could fall into a full-fledged recession.”

As the situation across advanced economies is shaky, Europe’s outlook has been particularly dented by new curbs imposed to contain the spread of the virus.

Christine Lagarde, President of European Central Bank, acknowledged that point head on.

Lagarde stated that the measures could further hinder a recovery that’s already started to fade.

The former IMF Chief said: “The recovery in the euro area remains uncertain, uneven and incomplete.

“The new Coronavirus-related restrictions currently being introduced across Europe will add to uncertainty for firms and households.”

The measures recently announced include a French curfew in Paris and other cities, while outside the euro zone, the UK-imposed new rules on gatherings.

Italy, which hit a daily record of virus cases Sunday, may impose more curbs this week. Ireland is considering health authorities’ recommendation to move the nation to the tightest lockdown level.

Lagarde discussed an additional worry about the dramatic destruction of work from the pandemic.

The situation has been worsened because of the greater damage in “job rich” services, which account for almost 75% of employment in euro-area countries, said she.

Compounding that, the services recovery will be slower because it doesn’t benefit like durable-goods manufacturing does from pent-up demand.

The President of European Central Bank stated: “The car that you did not buy in March you are going to buy in September.

“But the vacation you could not take in March, you are not going to take in October.”

Governor Andrew Bailey of Bank of England, also opined that there’s an “unprecedented level of economic uncertainty in view of the recent resurgence of virus cases.

The risks remain “very heavily skewed toward the downside.

“To borrow a phrase from sports, I’m afraid the hard yards in are still to come,” said Bailey.

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