Eurozone Economy Faces Another Recession

    With the resurgence of the pandemic, followed with the implementation of lock-down and the slow progress of vaccination in various countries, the Eurozone economy may shrink again at the beginning of this year and may fall into a double-dip recession.

    Analysts from banks including J.P. Morgan and UBS are downgrading their forecasts. The new variance of the coronavirus ravaging Britain right now could spread across Europe, pushing countries to impose stricter lockdowns than ever before. The repeated delays in vaccinations and trade disruptions caused by Brexit also contributed to the second consecutive quarterly decline in GDP.

    J.P. Morgan sees the fourth quarter of 2020 of Eurozone economy would contracting sharply by 9% of the fourth quarter of 2020 and 1% of the first quarter of this year, compared with an earlier forecast for a 2% growth.

    UBS expects the economy to contract by 0.4% in the first quarter, compared with expectations for a 2.4% growth. Goldman Sachs expects a small contraction with significant uncertainty with more possibility on further downside risks.

    The governments and the European Central Bank which already indebted hardly faced more pressure, and meeting will be held by European Central Bank to formulate a policy response to provide more financial support.