Economic activity as of 10th September 2020 in the euro area remained strong in line with the previous expectations, according to ECB press release. Manufacturing improving, but slowdowns in service sector. Domestic demand recovering, but weak price pressures and low energy prices dampening inflation. Monetary stimulus needed for economic recovery and medium-term price stability.
- Coronavirus remains the primary source of economic uncertainty.
- Financial conditions have improved but not reverted to the levels before COVID-19.
- Real GDP has fallen by 11.8% in the second quarter of 2020.
- GDP growth projections for 2020, 2021, and 2022 at -8%, 5.0%, and 3.2% respectively
- Harmonised Index of Consumer Prices (HICP) inflation in August down to -0.2%, from July’s 0.4%
- Projected inflation of 0.3%, 1.0%, and 1.3% in 2020, 2021, and 2022 respectively
- ECB interest rates unchanged
- Pandemic emergency purchase programme (PEPP) to continue at a total envelope of 1,350 billion euros, while the Asset Purchase Program (APP) at a monthly pace of 20 billion euros
- Liquidity to be provided through refinancing options
- Favorable bank rates continue to support growth
- Loans to private sector stable
Euro general government budget deficit to increase to 8.8 % in 2020 from 0.6% in 2019 due to extensive fiscal measures. EURUSD is down 0.07%, DAX is down 0.34%, FTSE 100 is down 0.51%, CAC 40 is down 0.49%
