Report
Loss of activity in the euro zone due to coronavirus: It is easy to calculate lost time
The coronavirus crisis will certainly lead to a decline in euro - zone GDP in the first half of 2020, whereas it could have grown by 0.5% or 0.6%. Past experience shows that lost GDP is never recovered: the loss in the GDP level is irreversible. It is then easy to calculate the length of the shock (on GDP, employment, share prices, etc.) caused by the crisis: this is the ratio between the size of the shock (the loss of GDP) and potential growth in the euro zone. As euro-zone potential growth is 1.1%, and if the loss of GDP caused by the crisis is also 1.1%, it will take one year to recover the levels of GDP, employment and share prices that would have been achieved without the crisis at the end of the first half of 2020.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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