Europe is now grappling with a second wave of coronavirus infections that could once again wreak significant damage on the region’s economy.
The euro zone, the area that shares the single currency, saw its economy tank by 11.8% in the second quarter of 2020, hit by strict lockdown measures used to contain the spread of the virus.
Economists predicted a rebound in the second half of 2020 but are now questioning those forecasts. Many governments are announcing new lockdown restrictions, or a slowing of reopenings, as they deal with a significant uptick in cases.
“The likelihood of a double dip, i.e. another contraction in the fourth quarter, has increased significantly,” Carsten Brzeski, a chief economist at ING, told CNBC Wednesday.
He expects more regional lockdowns in the coming weeks such as those already seen in Madrid, Spain, and Lyon, France.