Heading towards a sharp contraction in H1; H2 recovery shaped by the duration of the crisis and by the effectiveness of the unprecedented policy response, once the post-containment normalization phase starts.While a state of emergency has been declared by the President, almost all states are implementing emergency measures with various degrees of severity, from preventing gatherings to statewide quarantines.
Incoming data in late March show sharp drops in business and consumer sentiment, and an unprecedented rise in weekly jobless claims (3,2 millions).
The Eurozone economy is entering a recession as after Italy, almost European countries are facing severe Covid-19 outbreak and have implemented increasingly stricter measures of containment, with ripple effects coming via the fall in domestic demand, disruption of supply chains, and loss of external demand. Almost all sectors of economic activity have been affected. The most likely scenario is a U-shaped type of recovery, with the belly of the U dependent on the length of the public health emergency and on the effectiveness of fiscal packages delivered to support the economy once the normalisation phase starts.
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