ECB President Lagarde warned of a 15% contraction to the eurozone - Business Insider

ECB President Christine Lagarde told European Union ministers that she expects the eurozone to diminish by 15% as a consequence of the coronavirus outbreak, Bloomberg reported.German chancellor Angela Merkel indicated that the EU bloc should double the 540 billion euro ($665 billion) economic stimulus agreed on two weeks ago.Initially in April, the IMF predicted that the eurozone area would contract by 7.5%, before it revives to a projected growth level of 4.7% in 2021.Visit Business Insider's homepage for more stories.

The President of the European Central Bank Christine Lagarde told the region's leaders that the eurozone economy could shrink even further than previously expected, Bloomberg reported. Speaking to the EU's 27 heads of government via a video-conference on Thursday, Lagarde warned of a 15% contraction to the eurozone's GDP as a direct consequence of the pandemic, the news agency said.She also told the leaders they risk “doing too little, too late,” while discussing how to mitigate the economic fallout from the virus, Bloomberg said, citing sources.The ECB declined to confirm this report to Markets Insider on the basis of confidentiality.Read more: Credit Suisse outlines 5 reasons why stock traders should buy any dip that transpires this year — even as the market grapples with the coronavirus

Officials on the call said that the 15% was an extreme scenario, Bloomberg said, while the ECB president said her baseline estimate would be a 9% cut in output this year. After hearing the catastrophic message of the outlook from the president, German chancellor Angela Merkel told the region's leaders that she would back a huge stimulus package to rebuild the eurozone.EU leaders had agreed on a 540 billion euro package of economic stimulus two weeks ago, but Merkel indicated that the bloc should now double the rescue plan drawn up by finance ministers, Bloomberg said.Earlier this month, Lagarde had said it would be “extremely difficult” to predict how long an imminent recession would last and how deep the effects of an economic downturn would be. In a statement to the International Monetary and Financial Committee, she had pointed to a “large contraction” in output for the euro area, and a rapidly deteriorating job market. The IMF had predicted earlier in April that the eurozone area would contract by 7.5%, the most damaging recession the monetary union has suffered. It also laid out a growth forecast of 4.7% for 2021 as the continent's economy rebounds from the virus.