Steering the boat towards an unknown destination

The economy of the euro area is forecast to contract by 8.7% in
2020 but grow by 6.1% in 2021. The drop in GDP in 2009, the worst
year of the financial crisis, was just over 5%. There is no doubt
that the drop we face today is much more significant, although it
is expected to be short-lived with a sharp bounce back. However,
all EU countries are currently going through a second COVID-19
wave exponentially worse than the first in terms of number of
infections, albeit with fewer deaths (so far). Who knows what the
real hit to the economy will be, and indeed how long it will be
before we can resume normality?

In this episode of the Sound of Economics, Giuseppe Porcaro is
joined by Bruegel deputy director Maria Demertzis, and Nicola
Viegi, Professor of Monetary Economics at the University of
Pretoria, who is based in South Africa. They will explore the
theme of uncertainty, highlighted by the pandemic, and how to
plan policy interventions, especially monetary policy, in this
climate of uncertainty.



Maria Demertzis and Marta Domínguez-Jiménez, Bruegel research
analyst have recently published a paper for the European
Parliament on the topic, looking at the challenges faced by the
European Central Bank: ‘Monetary policy in the time of COVID-19,
or how uncertainty is here to stay’:
https://www.bruegel.org/2020/11/monetary-policy-in-the-time-of-covid-19-or-how-uncertainty-is-here-to-stay/