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BCN-04
ECONOMY-G7-EUROZONE
G7, eurozone to discuss coordinated economic response to coronavirus
PARIS, March 2, 2020 (BSS/AFP) – G7 and eurozone finance ministers will hold conference calls on Wednesday to “coordinate their responses” to the impact of the coronavirus on the global economy, French Finance Minister Bruno Le Maire said Monday.
“We will have that meeting by phone — because you need to avoid travelling too much — for the G7 to coordinate its response,” Le Maire said on France 2 television.
He said a similar meeting of eurozone finance ministers would also be held on Wednesday, adding “there will be coordinated action”.
Meanwhile, the head of France’s central bank said that governments and not central banks should take action for the moment.
The outbreak of the coronavirus, which has now killed more than 3,000 people and infected almost 90,000, has so far mostly been causing disruptions for businesses, Banque de France chief Francois Villeroy de Galhau told BFM Business television.
These are better treated with “targeted measures” from governments to support affected businesses rather than monetary policy from central banks, he said.
De Galhau said monetary policy was already very accommodative with ample low-rate funds for banks to support firms.
“If we need to do more and we believe that it will be effective, we could do it, but we’re not there yet,” he said.
The Bank of England, for its part, said it was monitoring the situation and working closely with domestic “as well as our international partners to ensure all necessary steps are taken to protect financial and monetary stability.”
Le Maire pledged the French government would provide the necessary support for domestic companies.
“We will demonstrate total solidarity towards entrepreneurs who are on the front line,” he said, noting that the government had already decided to let suppliers out of their contracts due to the coronavirus.
While the coronavirus has yet to shutter or slow many factories outside of China, it has already hit the travel and tourism sectors and seen companies scale back travel and cancel conventions.
France’s famed Louvre museum, a key attraction in one of the world’s top tourism destinations, closed Sunday and one of the country’s major annual trade fairs, the Paris Book Fair, due to be held later this month was cancelled.
– Bigger hit than expected? –
Le Maire said that the economic impact of the coronavirus on France’s economy will be greater than previous estimates.
“Now that the epidemic has hit many more countries, in particular France, the impact of the coronavirus on French growth will be much more significant” than if it had been contained to France, he said.
Le Maire declined to be more specific.
Until now the French government has forecast 1.3 percent growth for this year, and two weeks ago Le Maire said he expected the coronavirus to shave 0.1 percentage points off that.
France’s GDP growth slowed to 1.2 percent in 2019 after a tough fourth quarter that saw output fall by 0.1 percent amid a crippling transport strike against pension reform.
In December, the national statistics agency INSEE had forecast a return to 0.2 percent growth in the first quarter of 2020.
Meanwhile, the EU’s Internal Market Commissioner, Thierry Breton, said the coronavirus could tip Germany and Italy into recession.
“It’s too early to say for certain, but some are beginning to say it isn’t out of the question for a recession maybe in Italy and Germany… over the first two quarters of this year,” Breton said on BFMTV/RMC radio.
Germany’s economy narrowly escaped recession with flat growth in the final quarter of last year.
With exports of manufactured goods, in particular to China, a considerable part of its economy, Germany will feel a larger impact from the economic disruption in China than its eurozone peers.
BSS/AFP/MMA/1955HRS