The European Central Bank expects to remain in crisis-fighting mode until into 2021 to combat an "unprecedented decline" in the euro zone's economy caused by the coronavirus pandemic, its President Christine Lagarde said on Thursday.
The slowdown, also marked by rapidly deteriorating labour markets, is likely to steepen before the recovery phase kicks in, she told the bank's post-policy meeting news conference.
While the ECB is already considering options for its exit strategy from the emergency monetary measures it has introduced to cushion the impact of the pandemic, this "return to normal" would not happen over the coming months.
"We are looking at way down and probably out in 2021 in terms of return to a 'new normal'," she said.
ECB forecasts due in June and scenario results to be published on Friday "indicate a recovery and an uptick in the situation in 2021." So the ECB "very much" hopes the crisis will not become a permanent one, she said.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
ECB staff projections suggest euro area GDP could fall by between 5 and 12 percent this year, the bank said earlier.
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