March 18, 2020 / 12:30 PM / 12 days ago

Three months' lockdown could cause 5% shrinkage in EU economy: FAZ, citing Lagarde

FILE PHOTO: European Central Bank (ECB) President Christine Lagarde gestures as she addresses a news conference on the outcome of the meeting of the Governing Council, in Frankfurt, Germany, March 12, 2020. REUTERS/Kai Pfaffenbach

BERLIN (Reuters) - European Central Bank President Christine Lagarde told Europe’s heads of government that lockdowns being imposed to fight the coronavirus epidemic could easily cause the EU’s economy to shrink by 5%, the Frankfurter Allgemeine reported on Wednesday.

The newspaper cited high-ranking EU diplomats who had said that her estimates of the impact of the lockdown measures ranged between 2% and 10% of total growth.

The core calculation was based on the assumption that each month of lockdown would reduce growth by 2.1%, the newspaper cited the ECB as saying. The assumption that the economy would shrink 5% was based on a “realistic” assumption that lockdowns would last for three months, the bank told the newspaper.

Reporting by Thomas Escritt, editing by Scot W. Stevenson

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