The $1.9 trillion coronavirus relief package in the United States is a “significant engine for the world economy” and will have positive spillover effects in the euro zone, the chief economist of the European Central Bank told CNBC.
Earlier this month, President Joe Biden signed a massive fiscal stimulus plan that will send direct payments of up to $1,400 to most Americans. The program, which is already underway, is expected to prop up the world economy. In fact, the Organization for Economic Cooperation and Development estimated this month that the relief bill will add about 1 percentage point to global growth this year.
And the euro zone is expecting to benefit from that too.
“There will be positive spillovers from the U.S., the fact that there is a significant stimulus in the U.S. will boost global GDP, will boost exports from the euro area,” ECB Chief Economist Philip Lane told CNBC’s Annette Weisbach Monday.
The euro area has been severely hit by the health emergency, having contracted almost 7% in 2020. Though the ECB has forecast a growth rate of 4% for the euro area this year, this comes with a large level of uncertainty.
The economic performance will depend on the evolution of the pandemic, including new variants; as well as the vaccination rollout, which has been difficult for the EU so far. In addition, some EU nations are currently facing the start of a third wave of infections and have therefore imposed tougher restrictions on movement.
Reference: CNBC
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