Eurozone Private Sector Logs Record Fall In March

The euro area private sector logged its biggest monthly fall on record in March as the coronavirus disease, or covid-19, pandemic impacted heavily on economic activity, final data from IHS Markit showed Friday.

The final composite output index fell sharply to 29.7 in March from 51.6 in February. This was also weaker than the flash estimate of 31.4.

Both services and manufacturing sectors recorded notable declines in output in March. Manufacturers posted the sharpest fall in production since April 2009. At the same time, services activity declined at a record pace.

The final services Purchasing Managers’ Index plunged to a record low of 26.4 from 52.6 a month ago. The reading was also below the preliminary estimate of 28.4.

The covid-19 pandemic and associated measures taken to contain the outbreak through Europe weighed heavily on business performance.

Chris Williamson, chief business economist at IHS Markit said, the data indicate that the eurozone economy is already contracting at an annualized rate approaching 10 percent, with worse inevitably to come in the near future.

Incoming new work deteriorated to the greatest extent in the 22-year survey history. Further, confidence about the future was the lowest recorded by the survey since data were first available in July 2012.

Due to high uncertainty, companies reduced their employment levels. Job losses were registered for the first time in over five years and posted the fastest fall since June 2009.

Backlogs of work, a measure of capacity constraints at firms, deteriorated to the greatest degree in 11 years.

On the price front, the survey showed that reduced energy prices and lower employment costs pushed overall operating expenses down moderately for the first time in four years. Average output charges were reduced to the greatest degree in over a decade.

Among big-four economies, Italy and Spain registered the sharpest reductions in March.

Germany’s private sector posted a record contraction in March with the steep drop in services and accelerated reduction in manufacturing output.

The final composite PMI declined to 35.0 from 50.7 in February. This was below the flash score of 37.2. Likewise, the services PMI came in at 31.7, down sharply from 52.5 in February and below the flash 34.5.

France also posted record contraction in business activity in March. The composite PMI fell to 28.9 from 52.0 in February. The flash reading was 30.2.

Similarly, the services PMI declined sharply to 27.4 from 52.5 in February and below the preliminary score of 29.0.

Italy’s composite output index declined to 20.2 in March from 50.7 in February. The sector fell at the sharpest rate since the series began in January 1998. The services PMI came in at 17.4 versus 52.1 in February.

Spain’s private sector ended a period of nearly six-and-a-half years of uninterrupted growth. The composite output index fell to 26.7 from 51.8 in February. The services PMI fell nearly 30 points to 23.0 in March.

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Eurozone Manufacturing Activity Shrinks On Covid-19 Outbreak

Eurozone manufacturing activity contracted at the fastest pace in more than seven years in March as the outbreak of coronavirus, or covid-19 weighed on orders, output, employment and confidence, final data from IHS Markit showed on Wednesday.

The final factory Purchasing Managers’ Index fell to 44.5 from 49.2 in February. The reading was also below the flash estimate of 44.8.

The score has remained below 50.0 for fourteen consecutive months and reached its lowest level in 92 months.

The survey showed that covid-19 related shutdowns pulled down output and orders in March. The deterioration in manufacturing output was the greatest since April 2009.
Similarly, new orders deteriorated to a degree unsurpassed for just under 11 years.

Manufacturers continued to face significant obstacles in securing supplies. The average lead times deteriorated to the greatest degree in nearly 23 years of data collection.

Firms reduced their holdings of both input and finished goods in order to increase working capital. Further, manufacturers cut their employment levels at the sharpest pace in over a decade.

There was a marked decrease in input costs due to fall in raw material prices. Output charges also fell to the greatest degree recorded by the survey for four years.

Reflecting concerns over the short- and long- term impacts of the covid-19 pandemic, business sentiment logged its biggest monthly fall on record.

“The concern is that we are still some way off peak decline for manufacturing,” Chris Williamson, chief business economist at IHS Markit said.

Besides the hit to output from many factories simply closing their doors, the coming weeks will likely see both business and consumer spending on goods decline markedly as measures to contain the coronavirus result in dramatically reduced orders at those factories still operating, Williamson added.

At country level, Italy posted the sharpest deterioration in operating conditions, with the respective PMI hitting the lowest in nearly 11 years. The PMI plunged to 40.3 in March from 48.7 in February.

France’s final factory PMI declined to 43.2 from 49.8 in February. The flash reading was 42.9. The final score signaled the sharpest fall since January 2013.

The progression of the covid-19 outbreak into a pandemic saw the downturn in Germany’s manufacturing sector deepen in March. The manufacturing PMI came in at 45.4, down from a 13-month high of 48.0 a month ago and below the flash 45.7.

Spain’s operating conditions deteriorated to its lowest level in nearly seven years in March. The PMI dropped to 45.7 from 50.4 in February.

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From Spain to Germany, Farmers Warn of Fresh Food Shortages

In his three decades growing strawberries and blueberries, Cristobal Picon has learned how to grapple with problems ranging from droughts and driving winds to floods and freezes. But this year, the coronavirus outbreak has proven too much.

Every spring, Picon’s fields in Huelva, on the Atlantic coast of Spain tucked between Seville and the border with Portugal, are normally teeming with some 200 workers mostly from Morocco and Romania pulling the delicate berries from the plants and packing them for shipment. But this year, there are fewer than 100, largely locals — and Picon has no clue how he’s going to get the harvest in.

“You can cushion a bad crop, but when you have 80% of your production ready to be picked and no one to do it, you feel powerless,” Picon said. “We don’t know how this is going to end.”

From Huelva to Hamburg and Newcastle to Naples, Europe’s farmers are struggling to find people to bring in rapidly ripening fruits and vegetables, which frequently must be hand-picked, usually within a window of just a few days. They typically rely on seasonal workers from eastern Europe or northern Africa, but fears of the coronavirus are keeping hundreds of thousands of migrant laborers from leaving home, and controls on once-unfettered borders are stopping many of those willing to make the trip.

Strawberries and asparagus are already being left to rot in Spain, Italy, and southern France. Farther north, producers of everything from salad greens and tomatoes to onions and peas are fretting about what to do as the spring and summer growing season picks up.

The labor problems have some in the business worried that urban shoppers could face produce shortages. The concern is that even crops that get picked won’t reach consumers because outdoor markets are closed and transport links are iffy.

“The cities may soon start to lack fresh fruit and vegetables,” said Sebastien Heraud, a farmer in the Dordogne region of southwestern France and a leader of Coordination Rurale, an agricultural union. “Even those of us who can harvest have trouble selling.”

France expects some 200,000 workers will fail to show up this year. Coldiretti, an association of Italian farmers, estimates the country will be short as many as 100,000 foreign laborers. Germany typically has 30,000 migrant farm workers in March and 80,000 by May, but this year only a fraction of that number have shown up, according to Agriculture Minister Julia Kloeckner. On Thursday, the country closed its borders to migrant laborers from outside the European Union’s visa-free travel zone.

“The labor situation along the entire food supply chain is under immense strain,” Kloeckner told reporters in Berlin Thursday. “The number of workers from neighboring countries is falling fast.”

With restaurants, hotels, and shops mostly shuttered due to the pandemic, governments are hoping people from those sectors, or students facing months without classes, will fill the void. French Agriculture Minister Didier Guillaume on March 24 asked anyone who’s out of work to step up “so we can all eat.”

Germany has created a website listing thousands of unfilled agricultural jobs. A similar initiative in Austria has seen 7,000 people sign up since eastern European butchers and pickers headed home en masse as borders slammed shut a week ago, but the government says the country needs three times that number.

“I’m calling above all on young people not currently working and who don’t have children or grandparents to look after,” Austrian Labor Minister Christine Aschbacher said on a government website. “We need every helping hand.”

Still, shop clerks and waiters are mostly in cities, far from farms that need them, and the farmers are concerned that they may end up without workers once cafés, stores, and schools reopen. And hiring less-experienced pickers, coupled with rules to limit contact amid the outbreak, will likely boost costs and slow production, said Jack Ward, head of industry group British Growers.

“We went from a situation where six weeks ago nobody was talking about where our food comes from, to suddenly everyone wants to talk about it,” Ward said.

Some producers aren’t waiting for government help. Meyerhof, a farm in Willich, a few miles from the Dutch border in western Germany, has fields full of asparagus that will need to be harvested in the next few weeks — difficult, dirty work that involves many hours stooping to pluck the stalks. Concerned that the three dozen Romanians and Poles it had hired wouldn’t be able to make it, Meyerhof posted an appeal on Facebook. Within a day, 500 people had submitted applications.

“It has been an immense showing of solidarity,” said Anna Komp, marketing manager for Meyerhof. “We are so grateful, because we simply can’t do it ourselves.”

— With assistance by Jonathan Tirone, Agnieszka de Sousa, Iain Rogers, Michael Hirtzer, Marvin G Perez, Brian Parkin, Corinne Gretler, and Manisha Jha

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Spanish Doctors Are Forced to Choose Who to Let Die

In the emergency room at one of Madrid’s biggest hospitals, Daniel Bernabeu signed the death certificate for one patient and immediately turned to help another who was choking.

People are dying in waiting rooms before they can even be admitted as the coronavirus pandemic overpowers medical staff. With some funeral services halted in the Spanish capital and no space left in the morgues, corpses are being stored at the main ice rink.

Intensive-care wards overflowing and new rules dictate that older patients miss out to younger people with a better shot at surviving, Bernabeu said by telephone. “That grandpa, in any other situation, would have had a chance,” he said. “But there’s so many of them, all dying at the same time.”

As Covid-19 sweeps the continent, the focus is turning to Spain with dire warnings for parts of Europe such as the U.K. that only recently have taken more comprehensive action. The number of fatalities in the country of 47 million people is now rising faster than it did in China, where the virus first emerged, and faster than in Italy, where the disease took hold this month.

Spanish authorities reported another 738 people had lost their lives, making it the deadliest hotspot on Wednesday while elsewhere countries unveiled more measures to deal with the economic carnage. Spain’s total death toll, now at 3,434, already overtook China’s this week.

Prime Minister Pedro Sanchez, who less than three weeks ago was still brushing off the threat of the virus, has warned the population that most of them have never experienced a threat of this scale.

“Only the oldest, who knew the hardships of the Civil War and its aftermath, can remember collective situations that were harsher than the current one,” he said on March 14 as he imposed a state of emergency with loudspeaker drones buzzing around Madrid ordering people to get inside. “The other generations in Spain have never, ever had to face as a collective something so hard,” he said.

At La Paz hospital, the sprawling complex of 17 buildings where Bernabeu works, there were 240 people on the emergency room at one point on Tuesday waiting to be admitted. Doctors on the front line are not wearing full protection, just a cotton robe and a mask. They have the recommendation to keep a meter of distance with patients, but that’s impossible.

“Colleagues are falling sick around us,” Bernabeu said. “I’m a radiologist, I’m not supposed to be in ER, and yet here I am in the trenches.”

Read More: Spain’s Death Toll Passes China’s While Stimulus Moves Pile Up

On March 8, Sanchez was encouraging Spaniards to join a mass demonstration in support of international women’s day despite the lockdown that had been imposed in northern Italy.

The country had 589 confirmed cases of coronavirus at that point and four people had died. Some 120,000 people joined the event in Madrid that day, including several ministers and Sanchez’s wife, Begona Gomez. The government advised that the virus was still in a containment phase in Spain.

Since then, Gomez has tested positive along with Equality Minister Irene Montero and Deputy Prime Minister Carmen Calvo, who is 62 and has been hospitalized since Sunday.

By the next day, the number of confirmed cases had doubled and Sanchez and Spain were swept up in a spiraling, deadly contagion as the virus ran out of control. He imposed a lockdown less than a week later.

The initial days were dizzying as Spaniards came to terms with unprecedented restrictions on their daily lives and Sanchez and tried to gear up the health care system for an avalanche of cases. With a critical shortage of intensive care beds, ventilators and protective gear, doctors feared they would be overwhelmed. And, in a stark warning to other European governments, so it came to pass.

In several care homes for the elderly, staff abandoned the residents to their fate. Army units mobilized to disinfect the facilities found some patients lying in squalor and others remained where they had died in their beds, Defense Minister Margarita Robles said on Monday.

The Health Ministry admitted that it didn’t have the capacity to administer enough tests to track the spread of the contagion.

Doctors and nurses, meanwhile, are left to improvise as patient after patient arrives. Some tape garbage sacks to their arms to shield themselves. One nurse in the emergency room at a hospital in the Basque city of Vitoria said last week that protective plastic glasses are of such poor quality that medics can barely see through them to they feel for pulses.

Read More: Europe’s Desperate Doctors Are Shielded by Trash Bags

Some 4,000 medical workers have been infected, the government said on Monday, about 12% of the total. That compares with 8% in Italy and 4% in China. A nurses’ union in the Basque region is blaming the shortages for the death of a 52-year-old member.

The hope is that stricter efforts to keep people at home will start to bear fruit. Italy recorded marginally fewer new cases of the virus on Wednesday after three weeks of lockdown.

Some 635 people have been arrested in Spain for breaching the terms of the quarantine and almost 77,000 have been sanctioned by the police and the civil guard.

Talk among business leaders grappling with the economy in freefall is that the lockdown could last up to eight weeks, rather than the four the government has mandated so far, according to one Spanish official, who asked not to be identified by name.

Unemployment, Spain’s perennial weakness, is set to spike again with the summer tourist season looking increasingly like a writeoff after record revenues in recent years. But a survey by the state pollster released on Wednesday showed that 65% of respondents backed the harsh restrictions.

The emergency effort has also managed to avoid a total collapse in the hospitals and the government sold 10 billion euros ($11 billion) of debt this week, easing fears over a funding crunch in the short term.

“We know authorities are making an effort, but it’s still not enough,” Amaia Mayor, a spokeswoman for the nurses’ collective in the Basque Country, said by phone.

The government has acquired 640,000 rapid-testing kits. Over the weekend, authorities delivered 1.6 million masks bringing the total to 4 million since March 10.

Across the country, officials are rooting out the ventilators needed to keep the most critical patients alive—from hospital recovery units, operating rooms and military facilities. Universities, companies and even individuals are using 3D printers to manufacture more ventilators and protective glasses.

The army has set up a field hospital in the giant convention center on the outskirts of Madrid. It already has 1,400 beds in service and will have 5,000 when it’s completed this weekend.

This weekend will mark two weeks since Sanchez imposed the state of emergency, a key milestone for the incubation period for the coronavirus. That means the growth in new cases could start to slow. For the doctors and nurses fighting to cope, it has to.

La Paz hospital freed up some space Wednesday by turning more waiting rooms into Covid-19 wards. Next will be the main reception hall.

But in the meantime, the triage rules for access to intensive care are getting tougher and tougher. These places are kept free for the increasing number of young patients, whose lungs tend to collapse very fast.

“We are completely overwhelmed,” Bernabeu said.

— With assistance by Rodrigo Orihuela, Ainhoa Goyeneche, Jeannette Neumann, Thomas Gualtieri, and Zoe Schneeweiss

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Spain Sees Worst Day of Outbreak With 514 More People Dead

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Spain recorded 514 deaths from the coronavirus on Tuesday, the highest daily increase so far, as the country struggles to contain the outbreak despite strict rules that are keeping people from leaving their homes.

There were 2,696 deaths in total, compared to 2,182 the day before, according to the latest health ministry data. The number of confirmed cases rose to 39,673 from 33,089.

Prime Minister Pedro Sanchez had warned over the weekend that the worst was yet to come, and called on Spaniards “to be strong.”

The country is already in the second week of a lockdown set to continue until April 11, with severe restrictions on mobility, police patrolling the streets and the army helping to move patients.

In Madrid, the region worst hit by the crisis, the regional and city governments have set up make-shift hospitals in hotels and at the main convention center to alleviate the stress on a public health service operating at full capacity.

While the situation in Spain is not as grim as in Italy, the epicenter of the outbreak in Europe, it became on Saturday the second European country to register more than 1,000 deaths from the disease.

To try and offset the economic impact, the Spanish government announced a financial stimulus package worth as much as 20% of its gross domestic product. It plans to provide 100 billion euros of guarantees to company loans, as well as 17 billion euros of direct aid to keep firms afloat during the lockdown.

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Germany Drops Deficit Dogma as Deaths Surge in Italy, Spain

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Germany dropped its long-held resistance to deficit spending as the novel coronavirus continues to spread at an ever-faster pace across Europe, with Italy reporting a record number of new deaths.

Olaf Scholz, Germany’s finance minister, pledged more than 150 billion euros ($160 billion) in new debt — equivalent to almost 4.5% of Europe’s largest economy — to support small companies struggling to cover overheads or help low-income earners. Italy reported 793 deaths Saturday, bringing fatalities there to 4,825.

Worldwide, governments have pledged or are considering as much as $3 trillion in fiscal support to keep households and businesses afloat, aiming to avoid that temporary restrictions to combat the virus lead to more permanent damage. Their efforts are complicated as lockdowns in most of Europe’s large economies show little impact so far on the speed at which the virus spreads.

Spain said deaths from the coronavirus surged by more than 30% for a second day, with total cases accelerating despite a weeklong national lockdown. The number of confirmed infections in Germany rose to 21,755 from 18,608 a day earlier. Italy already surpassed China as the country with the most deaths from the virus last week.

Italy remains the hotspot of the epidemic in Europe, but cases multiply at an alarming rate in the region’s other large economies as well. Germany is poised to follow Italy, Spain and France in imposing a nationwide lockdown, after several states on Friday decided to impose such measures.

‘Inevitable’ Recession

A recession in Germany “is now inevitable” as the coronavirus pandemic spreads, European Central Bank Governing Council member Jens Weidmann said in an interview with Die Welt newspaper.

Volkswagen AG said a two- to three-week factory closure put in place this week may not be sufficient, and told workers that drastic steps will be needed to protect liquidity as government lockdowns make it impossible to do business as normal.

Scholz said the new spending is necessary to steer the economy through the economic fallout. Chancellor Angela Merkel will hold a cabinet meeting Monday to sign off on the plan, which will then have to be approved by Germany’s lower house, or Bundestag.

“We’ve decided to take on a very large sum and to ask the Bundestag’s approval, so that we have all the strength that will be needed in the coming weeks and months,” Scholz told reporters outside Berlin on Saturday.

Whatever It Takes

The new measures complement a separate rescue fund being set up to provide guarantees and loans, as well as allow the government to take stakes in companies. The size of that fund could swell to around 600 billion euros, the Handelsblatt newspaper reported.

Germany has long been averse to the idea of financing expenditures with debt, but the blow from the coronavirus crisis has prompted Merkel and her economic team to say they will do whatever it takes. Merkel has even signaled a willingness to consider joint European debt issuance, long a taboo in the country.

What Germany has pledged to fight the crisis:
  • EU100 billion in loans through state-run development bank KfW
  • EU100 billion earmarked for equity stakes in companies
  • EU400 billion in loan guarantees
  • More than EU150 billion supplemental budget financed with debt

The idea for joint bond issuance was raised by Italian Prime Minister Giuseppe Conte, and Merkel has said she’s ready to consider so-called corona bonds to help contain the impact of the virus. The European Commission will look at all instruments including such bonds to help the bloc overcome the pandemic, President Ursula von der Leyen said in an interview with Deutschlandfunk.

Adding to voices for a coordinated response, the head of the European Investment Bank urged a massive European lending program to help small and medium-sized companies. While national initiatives are helpful — such as a German plan to provide loans through state-owned development bank KfW — the same kind of aid is needed on a broader level, EIB President Werner Hoyer said in an interview with Frankfurter Allgemeine Zeitung.

“Either we decisively save European companies now, or we will soon have to save European states from financial collapse,” Hoyer said in the interview. “It doesn’t seem to me that everyone in European politics sufficiently understands this.”

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Europe Widens Lockdown as Nations Move to Limit Economic Damage

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Europeans were faced with increasingly draconian restrictions on public life Sunday, as governments from Spain to Scandinavia and the Baltic tried to check the spread of the coronavirus and limit the damage to the continent’s fragile economies.

With Europe now the epicenter of the outbreak, Austria banned gatherings of more than five people, urged citizens to self-isolate and said it will close restaurants from Tuesday. France announced reductions on domestic transport links by air, rail and bus, a day after closing restaurants, cafes and non-essential stores.

That’s after the two worst-affected European nations — Italy and Spain — went into lockdown and many other governments have either already followed suit or are poised to.

“The next weeks will be challenging, difficult and painful,” Austrian Chancellor Sebastian Kurz told an emergency session of parliament Sunday. “We’re hoping that we, our society and our economy will be resurrected after Easter, and our life can go on as we love and cherish it.”

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While one focus is checking the spread of the disease and limiting the strain placed on medical facilities, another is addressing the impact on economies. The European Central Bank unveiled a series of monetary measures Thursday that failed to pacify investors concerned that the euro-area is heading for recession.

Markets recovered Friday as Germany pledged to spend whatever it takes to protect its economy and the European Commission said it’s ready to green light widespread fiscal stimulus.

Still, HSBC Holdings Plc economists are among those declaring that a euro-area recession looks unavoidable. Italy and France were already contracting before the health emergency, while Germany had stalled.

For the broader European Union, the European Commission last week said there could be a 1% contraction this year, which would be more severe than the downturn experienced during the sovereign debt crisis a decade ago.

Here are other latest European developments:

– Spain’s confirmed cases jumped to 7,753 on Sunday, from 5,753 on Saturday, and the death toll more than doubled to 288 from 136.

– Italian authorities are attempting to halt an exodus of people from lockdown in the north to second residences or toward their families in the south, daily la Repubblica reported.

– Lithuanian Prime Minister Saulius Skvernelis pledged to announce a financial aid package of “no less” than 1 billion euros ($1.1 billion) on Monday.

– Estonia will bar everyone except for residents and their family members from entering the country from Tuesday.

– The Swiss government may provide additional economic support on top of its $10 billion COVID-19 aid package if the crisis worsens, Switzerland’s President Simonetta Sommaruga said in an interview with SonntagsZeitung.

– Slovenia suspended all public transport from Sunday and the government is expected to close all bars and restaurants.

– Poland has implemented full border controls and international flights are suspended. Cafes, bars, restaurants and shopping malls are closed.

– The Czech government may place the entire nation into quarantine, Prime Minister Andrej Babis said.

– Greece closed its land borders with Albania and North Macedonia and stopped flights and sea arrivals from the two nations.

— With assistance by Zoe Schneeweiss, Simon Kennedy, Milda Seputyte, Joao Lima, Jan Bratanic, Marek Strzelecki, Peter Laca, Sotiris Nikas, Jerrold Colten, and Macarena Munoz Montijano

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Spain Isolates Tourists in Luxury Tenerife Hotel Amid Virus Fears

Spanish authorities isolated about 1,000 guests and workers at a seaside hotel on the Canary island of Tenerife after an Italian tourist there initially tested positive for the coronavirus.

The people may not enter or leave the H10 Costa Adeje Palaceuntil there is definitive confirmation on whether the tourist is infected, an official from the Canary Islands government confirmed by phone. The people are being held in preventive isolation, not under a formal quarantine, the person said.

“Guests will remain at the hotel until the results from the second test come out,” Spanish government spokeswoman Maria Jesus Montero told journalists on Tuesday. “Appropriate measures will be taken depending on the results.”

People at the hotel are being tested for symptoms of the virus, according to a statement by the islands’ healthcare department. It said further action will be decided later on Tuesday. That’s when the results are due of a final test of the Italian tourist.

A second case of coronavirus has been diagnosed in Catalonia, the region’s health department said in an emailed statement that gave no further details on the case. The Catalan government will give more information at a press conference at 4:30 p.m. local time, the statement said.

The Italian tourist is now held in isolation at the Hospital Universitario Nuestra Senora de La Candelaria in Tenerife, and two more people are in observation, according to the healthcare department. The man’s wife is in hospital, Montero said on Tuesday, without specifying if she was one of the people in observation. Her husband is a doctor from Lombardy, a region of northern Italy that is a principal focus of the outbreak in Europe, Efe news service reported.

Spain so far has reported only two confirmed cases of coronavirus, a German citizen in the island of La Gomera in the Canary Islands off western Africa, and a resident in the island of Mallorca in the Mediterranean. Each of them recovered from the illness.

Coronavirus infections worldwide have jumped to almost 80,000, with more than 2,600 deaths, mainly in China. In Italy, which is hit with Europe’s largest outbreak of the virus, seven people have died, at least 283 have been infected and thousands remain in lockdown.

Authorities in Tenerife activated the coronavirus protocol on Feb. 24 when a local hospital confirmed the Italian citizen tested positive in an initial exam. Hotel owner H10 said in a statement it’s collaborating closely with health authorities and has implemented all recommended measures to ensure the safety of clients and employees.

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EU Retains Eurozone Growth Projections, Cites Coronavirus As Key Downside Risk

The European Commission retained its growth outlook for the 19-nation currency bloc, but cited the outbreak of coronavirus as a key downside risk, after the ‘Phase One’ trade deal between the US and China reduced tensions to some extent.

In the winter forecast, the executive arm of the EU said the outbreak and spread of the ‘2019-nCoV’ coronavirus and its impact on public health, human lives and economic activity has been a source of mounting concern. The duration of the outbreak, and of the containment measures enacted, are a key downside risk, the EU added.

According to the commission, the European economy remains on a path of steady and moderate growth. The agency forecast the euro area economy to grow 1.2 percent each this year and next, unchanged from the autumn forecast.

Meanwhile, on the back of supportive monetary policy, slightly higher oil price assumptions and some upward momentum in underlying price pressures, the inflation outlook for the currency bloc was revised upwards.

The 2020 inflation forecast was raised to 1.3 percent from 1.2 percent. Likewise, the projection for next year was lifted to 1.4 percent from 1.3 percent.

In Germany, real GDP growth is forecast to rebound somewhat to 1.1 percent in 2020. Growth is forecast to consolidate at 1.1 percent or above next year.

Spain’s GDP growth forecast for 2020 and 2021 was revised up compared to the autumn forecast by 0.1 percentage points, to 1.6 percent and 1.5 percent, respectively.

France’s GDP growth is set to decelerate to 1.1 percent in 2020 and recover to 1.2 percent in 2021.

Italy’s real GDP growth is forecast to pick up only slightly to 0.3 percent in 2020, due to a negative carry-over effect, and to 0.6 percent in 2021. Downside risks to the growth outlook remain pronounced, the EU noted.

After UK’s withdrawal from the EU, the British economic growth is expected to remain broadly stable at 1.2 percent in 2020 and 2021. Projections for 2021 are based on a purely technical assumption of status quo in terms of trading relations between the EU and the UK.

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