The economic low point was passed in April/May, so far the good news. However, the depth of the economic fall was without precedent and consequences for investment and employment will only become apparent in the coming months. In the euro zone, Spain and Italy were hit hardest. Italy was a country that had already been hit by a pronounced political and economic structural crisis in recent years.
The states have reacted and are trying to cushion the negative effects of the corona crisis by sharply increasing government spending. The national debt ratio should therefore rise to around 104 percent of gross domestic product in the euro zone in 2020, with Italy standing out at 160 percent. However, this development has not yet led to a discussion about the stability of the euro zone and a new start of the euro crisis.
The decisive factor for the calm development was the cohesion of the euro countries and the support of the ECB. The ECB has further improved the debt sustainability of the euro countries through government bond purchases and permanently low interest rates. At the same time, there were some initiatives for joint support in the euro area. Both together have obviously convinced investors and euro area bonds have met with robust demand. As long as the ECB and the euro countries do not fundamentally change their policies, stability should continue.