The novel coronavirus pandemic is expected to cause “the greatest disruption to global economic activity since the Second World War,” the European Bank for Reconstruction and Development (EBRD) said on April 8.
It will affect the banks’ emerging economies and rapid recovery is not guaranteed, the bank said in a statement.
Normalcy is expected to return in the second half of 2020 in the bank’s positive scenario but if lockdowns remain in place much longer, effects on the economy will be deeper.
“This would have a negative impact on the potential rate of medium-term growth and may result in deep structural damage to consumer service industries, such as airlines, cinemas, and restaurants, although others, including food deliveries, may benefit,” it said.
It warned about public debt because of the virus. “The lockdowns would also impose a large fiscal cost and result in sharp increases in public debt.
These new levels of debt may be affordable in some countries because of very low real interest rates but other economies may face binding fiscal constraints.”
Hurriyet Daily News