The euro zone economy will contract by a record 7.7% this year because of the COVID-19 pandemic according to the European Commission forecast.
According to the same forecast, inflation will almost disappear and public debt and budget deficits will balloon. The inflation rate will slow to 0.2% in 2020, before accelerating to 1.1% next year. Investment will plunge 13.3% this year, it said.
The European Commission forecast euro zone debt will jump to 102.7% of GDP this year from 86% last year.
The Commission’s plan for financing the recovery would be ready soon and it would be approved by EU leaders in June.
Italy, Greece, Spain and Portugal will be among the hardest hit by the economic effects of the pandemic. Greek GDP will contract the most, by 9.7%. Italy will record the second deepest recession, 9.5%.
China said on Wednesday tariffs should not be used as a weapon. The U.S. President Donald Trump threatened to impose more of them in retaliation for China’s handling of the novel coronavirus. Tariffs, in general, hurt all parties involved, Chinese foreign ministry spokeswoman told reporters at a daily briefing.
START TRADINGForex – European Commission predicts record recession
The Canadian dollar weakened against its U.S. counterpart on Wednesday as a rally in the price of oil lost some momentum and the greenback broadly climbed. The loonie was trading 0.4% lower at 1.4101 to the greenback.
The Japanese yen reached a seven-week high against the U.S. dollar after a court challenged German participation in the euro zone’s stimulus programme. The yen rose 0.2% to 106.20, its strongest since March 17.
The euro resumed its decline on Wednesday amid worries about ECB bond-buying. The euro fell to a near two-week low of $1.0786 on Wednesday. The common currency was last down 0.4% at $1.0795.
Sterling fell as much as 0.7% against the dollar before construction PMI data for April, which was worse than expected. The pound did not move significantly when the data was announced at 0830 GMT.
Against a stronger dollar, the pound was last at $1.2375, down half a percent since New York’s close. Versus the euro it was flat at 87.19 pence.
Oil fell to around $30 a barrel on Wednesday. A report showing a higher-than-expected rise in U.S. inventories offset hopes for a recovery in demand as some countries ease coronavirus lockdowns.
Brent was down 62 cents, or 2.0%, at $30.35 a barrel, having risen in the past six sessions. WTI crudefell 91 cents, or 3.7%, to $23.65.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money