ECB sees big 2020 recession, partial rebound next year

    FRANKFURT, June 4 (Reuters) - The European Central Bank
expects the euro zone to suffer a deep recession this year, with
losses only partly made up in 2021 as pandemic-related
restrictions weigh on output for an extended period.
    In what ECB President Christine Lagarde described as a
baseline scenario, the ECB sees the bloc's economy shrinking by
8.7 percent this year after much of Europe was shut down for
over two months this spring to halt the coronavirus outbreak. 
    It then sees the economy expanding by 5.2% in 2021 and 3.3%
in 2022, although Lagarde said risks to the baseline scenario
were tilted to the downside. The ECB will publish forecasts
under two further scenarios later on Thursday, Lagarde said. 
    She said the extent of the contraction and the recovery
would depend on "the duration and the effectiveness of the
containment measures, the success of policies to mitigate the
adverse impact on incomes and employment, and the extent to
which supply capacity and domestic demand are permanently
    Although the ECB's previous forecasts, released in March,
did not take into account the impact of the shutdown, Lagarde
had recently predicted a GDP drop in the range of 8% to 12% for
this year. 
    The ECB also revised its inflation projections sharply lower
after oil prices crashed and taking into account the impact of
the coronavirus lockdowns. It now sees consumer price growth of
0.3% this year, well below its previous forecast of 1.1% and far
from its target of almost 2 percent.
    The following are the ECB's growth and inflation projections
through 2022. Figures in brackets are the March projections,
which only included the earliest hit from the pandemic.
                2020            2021           2022
GDP growth  -8.7%  (0.8%)    5.2%  (1.3%)    3.3%  (1.4%)
Inflation    0.3%  (1.1%)    0.8%  (1.4%)    1.3%  (1.6%)

 (Reporting by Balazs Koranyi; Editing by Catherine Evans and
Carmel Crimmins)

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