“The June 2020 macroeconomic projections prepared by Eurosystem staff for the euro area point to a reduction in growth at an unprecedented pace in the second quarter of this year before its subsequent return to expansion in the second half, thanks to the decisive and considerable support provided by budgetary and monetary policy measures”. He writes it there ECB in the traditional economic bulletin. According to the Eurotower, the damages will be considerable: economic activity will register a marked decline, as will the "prospects for inflation" and, despite a recovery is expected for the second half of the year, in the basic scenario of the projections on Annual GDP of the Eurozone is expected to drop by 8,7% in real terms in 2020 and a recovery of 5,2% in 2021 and 3,3% in 2022.
These data, released one after the other, confirm that "the euro area economy is undergoing an unprecedented contraction" as a result of the coronavirus pandemic. Globally, notes the ECB again, “lhe Covid-19 pandemic has crippled the world economy and the measures taken by the governments of all countries to contain the spread of the virus have led to the recent sharp decline in economic activity”.
After the bad news, however, comes the reassurances: "'In the current rapidly evolving economic context - writes the ECB in its bulletin - the Governing Council reiterates its maximum commitment to take any necessary action within the scope of its mandate to support all citizens of the euro area in the current phase of extreme difficulty”. To avoid any kind of misunderstanding (especially among German listeners), the bank headed by Christine Lagarde specifies that what has been said "relates above all to the role played by the Governing Council in ensuring that monetary policy is transmitted to all sectors of the economy and to all countries, in pursuit of the ECB's mandate to preserve price stability”. The Governing Council “therefore remains ready to adjust all its instruments, in the manner it deems appropriate, to ensure that inflation continues to move steadily closer to the target level, in line with its commitment to symmetry”.
In the long document published today, the ECB also delivers a snapshot of the Italian situation. In fact, our country appears in the list of economies in the Eurozone in which "a more marked decline in economic activity has been recorded". To keep Italy company there are France and Spain, while Germany and the Netherlands have resisted better.
It is mainly our small and medium-sized enterprises that suffer, which showed a "more abrupt" reduction in turnover compared to that of the other countries. If the SMEs of the Eurozone have recorded a contraction in turnover equal to -2%, "the sharpest decline was recorded in Italy, followed by Slovakia, Greece and Spain, while in Germany and France a much smaller net percentage of SMEs reported an increase in turnover” reads the Bulletin.
Profitability is also bad. On this chapter, Italian companies, together with Greek, Spanish and Slovakian ones “recorded a particularly strong reduction in profits. At the sectoral level, industry seems to have been the hardest hit by the deterioration in profits (-20 per cent, compared to the previous -7 per cent), above all in Italy”. Heavy trade, with 37% of Italian SMEs showing a decline in profits compared to 19% marked by SMEs in the euro area.
Same trend for the airplane transport. If globally the capacity of scheduled flights fell by 65%, in Italy, Spain, France and Germany, the same figure showed a decrease of more than 90% compared to the same period of 2019.
Finally, the ECB announces that 742 European banks have drawn 1.310 billion euros through the TLTRO III, i.e. the longer-term refinancing operations launched by the ECB to deal with the coronavirus emergency and allow banking institutions to support the real economy.
