Helme to form committee to prepare for possible economic crisis
Minister of Finance Martin Helme (EKRE) is convening a new committee which will start analyzing the novel coronavirus' impact on the economy and work out relief measures in case of a possible economic crisis. According to Helme, in the worst-case scenario, the government may start to draw up a supplementary budget.
"I have initiated a risk scenario analysis," Helme said at Thursday's government press conference. "We are also putting together a team comprised of economic experts from the Ministry of Finance, the Bank of Estonia, the Ministry of Economic Affairs and the Office of the Prime Minister which will analyze possible risk scenarios, work out a bunch of relief proposals for relief measures as well as figure out trigger spots, as in at what point we find that they need to be implemented."
Helme said that European finance ministers held a teleconference on Wednesday which also included the president of the European Central Bank (ECB) and during which an overview was given of what the situation is in the euro area and what risks they are seeing.
"My colleagues also provided an overview of what their plans are and how they plan to react to the situation," he added.
"Economically speaking, the note of concern is very significant," the minister continued. "The question is first and foremost how long this situation will last. In what period will we see the spread of the disease increase, and when will it start to subside? The general consensus is that we are still talking about months during which the situation will likely continue to get worse before it starts to get better. What will the impact of this be on the economy more broadly, and how quickly will the economy recover?"
According to Helme, the recovery may come within the current year already, such as at the end of the second quarter or in the third quarter. At the same time, some kind of unforeseen processes may be initiated on the stock exchange or money markets.
"If we reach some kind of breaking point, then I tend to think that we'll be forced to deal with some kind of supplementary budget if we make any very significant changes in the state budget strategy process," he said.
Should the coronavirus outbreak spread, it could cause the growth of the global economy to slow by as much as half, the OECD warned. Last November, the OECD forecast 2.9 percent economic growth in 2020; its new forecast has been reduced to 2.4 percent.
Should the coronavirus outbreak turn out to be extended and serious in nature, in a worst-case scenario, economic growth may slow to as little as 1.5 percent. This would be the weakest result since an economic crisis-related drop in 2009.
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Editor: Aili Vahtla