According to the report, southern European countries are still recovering from years of austerity, while the level of public debt is high, the society is seriously aging, and there is a long-term fiscal deficit. The European Central Bank will act quickly to resist the danger of crisis, but any one of these countries is in debt trouble, which will cause great turmoil in the financial system. On the contrary, difficulties will quickly flock to the world.
European Central Bank President Lagarde denied that the European debt crisis would recur. On Wednesday, European Central Bank President Lagarde said at the 2020 European Youth Event that the impact of the epidemic on the economy is difficult to predict, but the European Central Bank is ready to expand the scale of real estate purchases when necessary, and firmly believes that there will be no new European debt crisis. Lagarde said that the euro zone economy will be in the middle of soft growth and serious decline in the future.
Affected by the epidemic, the ECB's idea of moderate economic growth has long been out of date, and it is difficult to predict how much damage the economy will suffer. However, it will not worry too much about high debt levels. It is important to know where the money raised from debt is spent. Although the EU's 750 billion euro recovery fund scheme boosted European stocks, investors should pay attention to the depressed economic prospects and possible debt difficulties, which will limit the upside of the stock market. At the same time, in the medium and long term, hedging requirements are expected to provide some support for gold prices.
Economic and financial damage to emerging economies The epidemic situation in emerging markets has worsened, and the economic growth rate of many countries has declined. After the outbreak of the epidemic, with the global economic downturn, external requirements decreased, the economic growth rate of emerging economies dropped significantly, and some countries even began to enter a real decline.
The turmoil in the financial system has intensified, and capital outflows cannot be ignored. Due to the crisis hurt by COVID-19 epidemic, investors withdrew $83 billion from emerging markets in mid-March, which is the largest capital outflow from emerging markets on record.
Economic sensitivity has increased, and some countries have fallen into debt difficulties. At present, the prospects of epidemic development and global economic recovery are highly variable, and international trade and investment are deeply depressed. Under the background of sluggish external demand and capital outflow, the vulnerability of emerging market economies is gradually exposed, and the debt risk is further increased.