IMF / EUROPE OUTLOOK COVID-19

30-Mar-2020 00:03:04
Europe is headed in to a significant economic downturn of up to negative three percent per month due to the COVID-19 pandemic, Poul Thomsen, Director of the European Department at the IMF, said in Washington, DC today. IMF
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STORY: IMF / EUROPE OUTLOOK COVID-19
TRT: 3:04
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS

DATELINE: 30 MARCH 2020, WASHINGTON DC
SHOTLIST
FILE – WASHINGTON DC

1. Wide shot, IMF building exterior

30 MARCH 2020, WASHINGTON DC

2. SOUNDBITE: (English) Poul Thomsen, Director European Department, International Monetary Fund (IMF):
“The recession is going to be bad. We don't know how bad, but it will be bad. Look, the strategy here is to deliberately shut down big segments of the economy as a way of coming to grips with this crisis. These shutdowns are not accidents, it's a deliberate act. We are shutting down non-essential sectors that account for one-third of GDP. That means every month that this shutdown continues, there will be at least a loss of 3 percent of GDP just in those sectors. Then there are the wider implications on the rest of the economy.”

FILE – WASHINGTON DC

3. Rack focus, IMF building exterior

30 MARCH 2020, WASHINGTON DC

4. SOUNDBITE: (English) Poul Thomsen, Director European Department, International Monetary Fund (IMF):
“I think the policy reactions of European policymakers are very strong. As far as the financial sector and monetary policy is concerned, we have huge asset purchases. This is very welcome. And the regulators are allowing banks to use the buffers, so-called countercyclical buffers, that they built up during the good years. If there ever was a time to use that, this is obviously now.”

FILE – WASHINGTON DC

5. Rack focus, IMF building exterior

30 MARCH 2020, WASHINGTON DC

6. SOUNDBITE: (English) Poul Thomsen, Director European Department, International Monetary Fund (IMF):
“We know from past crises: The problem is that if somebody loses its job for a long time, they lose skills and have difficulty coming back into the labor market. We know if non-performing loans are allowed to build up on a large scale, it impairs households and banks and financial institutions' balance sheets and that will be a drag on the recovery also. So, putting all this money into the system, and reduce the risk of non-performing loans, reduce the risk of layoffs, is really going to help the recovery gain speed once the medical crisis is under control.”

FILE – WASHINGTON DC

7. Zoom out, IMF building exterior

30 MARCH 2020, WASHINGTON DC

8. SOUNDBITE: (English) Poul Thomsen, Director European Department, International Monetary Fund (IMF):
“Debt levels are not a concern here. We need to be sure that we inject sufficient money to contain the crisis. All European countries have the fiscal space to react powerfully.”

FILE – WASHINGTON DC

9. Pan right, IMF building exterior

30 MARCH 2020, WASHINGTON DC

10. SOUNDBITE: (English) Poul Thomsen, Director European Department, International Monetary Fund (IMF):
“The part of Europe that we should focus on first and foremost are the smaller economies in Central and Eastern Europe outside the EU. They don't have the deep financial markets and the linkages to the EU that are important for the policy space, for their ability to react forcefully. And actually, more than half of these countries have already approached us for emergency assistance. So, we are an important vehicle for ensuring that these countries have the necessary fiscal space so that they can also react in an appropriate way to the crisis.”

FILE – WASHINGTON DC

11. Wide shot, IMF building exterior
STORYLINE
Europe is headed in to a significant economic downturn of up to negative three percent per month due to the COVID-19 pandemic, Poul Thomsen, Director of the European Department at the IMF, said in Washington, DC today (30 Mar).

SOUNDBITE: (English) Poul Thomsen, Director European Department, International Monetary Fund (IMF):
“The recession is going to be bad. We don't know how bad, but it will be bad. Look, the strategy here is to deliberately shut down big segments of the economy as a way of coming to grips with this crisis. These shutdowns are not accidents, it's a deliberate act. We are shutting down non-essential sectors that account for one-third of GDP. That means every month that this shutdown continues, there will be at least a loss of 3 percent of GDP just in those sectors. Then there are the wider implications on the rest of the economy.”

Asked whether the response of European policymakers has been sufficient, Thomsen argued that they are pulling out all the stops during a time when it is clearly necessary.

SOUNDBITE: (English) Poul Thomsen, Director European Department, International Monetary Fund (IMF):
“I think the policy reactions of European policymakers are very strong. As far as the financial sector and monetary policy is concerned, we have huge asset purchases. This is very welcome. And the regulators are allowing banks to use the buffers, so-called countercyclical buffers, that they built up during the good years. If there ever was a time to use that, this is obviously now.”

Pouring money into the system in Europe would help to prevent long-term job losses, an impairment of the financial sector, and help with a speedy recovery, Thomsen said.

SOUNDBITE: (English) Poul Thomsen, Director European Department, International Monetary Fund (IMF):
“We know from past crises: The problem is that if somebody loses its job for a long time, they lose skills and have difficulty coming back into the labor market. We know if non-performing loans are allowed to build up on a large scale, it impairs households and banks and financial institutions' balance sheets and that will be a drag on the recovery also. So, putting all this money into the system, and reduce the risk of non-performing loans, reduce the risk of layoffs, is really going to help the recovery gain speed once the medical crisis is under control.”

Thomsen voiced the IMF’s confidence that European leaders are doing enough to counter the economic effects of the COVID-19 pandemic.

SOUNDBITE: (English) Poul Thomsen, Director European Department, International Monetary Fund (IMF):
“Debt levels are not a concern here. We need to be sure that we inject sufficient money to contain the crisis. All European countries have the fiscal space to react powerfully.”

Thomsen emphasized that the main effort of the IMF is to help smaller Central and Eastern European economies outside of the EU. They have limited access to external capital and smaller and less developed banking systems, which will in turn make it more difficult to finance large decreases in their fiscal deficits.

SOUNDBITE: (English) Poul Thomsen, Director European Department, International Monetary Fund (IMF):
“The part of Europe that we should focus on first and foremost are the smaller economies in Central and Eastern Europe outside the EU. They don't have the deep financial markets and the linkages to the EU that are important for the policy space, for their ability to react forcefully. And actually, more than half of these countries have already approached us for emergency assistance. So, we are an important vehicle for ensuring that these countries have the necessary fiscal space so that they can also react in an appropriate way to the crisis.”
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