IMF's Thomsen: Europe's major economies face 3% GDP drop for each month of sectoral closures

Europe's major economies are facing a 3% GDP contraction for each month of sectoral closures due to the coronavirus outbreak, International Monetary Fund's (IMF) Europe Director Thomsen said in a blog post on Monday.

Key takeaways

"If there was ever a time for using available buffers and policy space, this is surely it."

"Europe's strong welfare system not constructed to meet the magnitude of demands caused by coronavirus pandemic."

"ECB interventions, European Stability Mechanism critical to ensure that countries with high public debt can react forcefully to crisis."

"Some EU emerging market countries will find it difficult to finance large increases in their fiscal deficits."

"Most of nine non-EU emerging economies in central and eastern Europe have sought IMF emergency financing assistance."

"Determination of euro area leaders to do what it takes to stabilize euro should not be underestimated."

"Turkey, Russia not among non-EU countries seeking IMF aid."

"More countries likely to follow in what is already largest number of aid requests ever received by the IMF at one time."

Market reaction

Following these comments, major European equity indexes trade mixed with the Euro Stoxx 50 posting small losses and Germany's DAX adding 0.4%.