Frankfurt: The worst of the economic crisis unleashed by the coronavirus pandemic is likely over, European Central Bank chief Christine Lagarde said yesterday, warning however that the new normal will look different from what was before.
“We probably have passed the lowest point. I say that with some trepidation because of course there could a severe second wave if we learn anything from the Spanish Flu,” she told an online conference.
“We are not going to return to the status quo. It’s going to be different. The recovery is going to be incomplete and transformational.”
The hardest hit industries – such as airlines, hospitality and entertainment – will emerge from the crisis “in a different shape”, while new sectors may arise. The recovery would also be at different paces.
“It’s going to be a continent at a time,” warned Lagarde.
The International Monetary Fund predicted in its latest forecasts on Wednesday that the world economy would contract by 4.9 per cent in 2020, before growing 5.4pc next year.
By region, the contraction is most dramatic for the euro zone, which is set to see the economy shrink 10.2pc.
China in contrast, could yet post growth of 1pc for 2020, according to the IMF.
Former IMF chief Lagarde said she believed central banks have been playing their part to mitigate the damage.
“The central banks I think have responded massively, diligently to the challenge and we will continue to do so.”
“Call it whatever it takes, call it using all the levers... The mandate is the same -- our mandate is price stability.”