Having witnessed the 2008 financial crisis and the subsequent eurozone debt crisis, Europe's policymakers should already realize what the COVID-19 pandemic could mean for the economy. To avert a self-perpetuating downward spiral, the European Central Bank, in particular, will need to start thinking outside the box.
BRUSSELS – The coronavirus pandemic has triggered a combined negative supply and demand shock of unprecedented intensity. Both are having a significant impact on the production of goods and services, and because everyone’s income ultimately derives from production, household incomes are quickly falling. With many economies already in a downward spiral and heading toward recession, the danger is that the downturn will become a self-perpetuating and ever-deepening rout.
BRUSSELS – The coronavirus pandemic has triggered a combined negative supply and demand shock of unprecedented intensity. Both are having a significant impact on the production of goods and services, and because everyone’s income ultimately derives from production, household incomes are quickly falling. With many economies already in a downward spiral and heading toward recession, the danger is that the downturn will become a self-perpetuating and ever-deepening rout.