As the situation in Asia seems to be coming under control, Europe is turning into the second major epicenter of the deadly Wuhan coronavirus. So far the virus has established itself all over Europe with major hot spots developing in Northern Italy, France, Spain and Germany.
The hardest-hit countries represent Europe’s major population centers, responsible for much of the economic activity on the continent.
As European policymakers take drastic steps to rein in the impacts of the rapidly-spreading disease, the European Central Bank (ECB) warns of the negative impact this crisis could have on the economy. But with German leaders predicting that the virus will eventually infect most of their population, it’s clearly too late to avert the economic catastrophe.
Despite originating in Wuhan China, coronavirus is rapidly becoming a European disease. Major outbreaks have developed in virtually every single European country with Italy becoming the hardest-hit nation outside of China.
The five hardest-hit European nations are as follows:
The fatality rate in Italy has hit a staggering 6.21% compared to just under 2% in Spain and France – and a flu-like death rate of only 0.12% in Germany.
With a fatality rate of 0.12% that would be 59,000 dead Germans. With Italy’s 6% fatality rate, that number jumps to a staggering 3.08 million.
Christine Lagarde, president of the European Central Bank, believes the coronavirus could shock Europe’s economy as badly as the financial crisis of 2007. At a conference call with European Union leaders, she informed them that the Bank will take steps as soon as this week.
Failure to act boldly now would raise the risk of the collapse of part of your economies
But while bold government action will save lives as slow the spread of coronavirus in Europe, it probably won’t be able to avert the looming financial catastrophe. That’s because tactics like travel restrictions and quarantines keep people at home and slow economic activity.
The European economic landscape was already in trouble – even before the coronavirus.
February data revealed that German industrial production fell for the fifth time in seven months. And the German economy is only expected to grow 0.4% in 2020. The coronavirus could easily tip Germany’s already anemic growth into contraction territory – especially if the disease infects 60-70% of the country’s population as Angela Merkel predicts.
Despite the writing on the wall for a European recession, most analysts expect Lagarde’s ECB to stimulate the economy through monetary policy. But with interest rates already at -0.5%, the Bank’s options are limited.
European policymakers will have to rely on fiscal stimuli like tax breaks and other incentives to soften the blow of the inevitable coronavirus recession – but its too late to stop it.
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