The latest findings from the CEPR - EABCN Euro Area Business Cycle Dating Committee (EABCDC) 

Thursday, May 7, 2020

The CEPR-EABCN Euro Area Business Cycle Dating Committee met electronically on 16 April 2020 to prepare its spring statement on the state of euro area economic activity in the midst of the COVID-19 crisis.

Although the Committee does not nowcast or forecast, it notes, before official macroeconomic data are published, the deep contraction caused by the COVID-19 pandemic. Economic activity in the euro area will almost surely be substantially lower in 2020Q1 and 2020Q2 than in 2019Q4 but the cyclical designation of this period will depend on which of the possible future paths the euro area will take thereafter.

One prospective scenario is that the pandemic shock turns out to be the impulse that has pushed the euro area into a recession. The length and depth of the recession will depend, barring additional shocks, on the path of the pandemic and the strength of traditional adverse business-cycle dynamics (which, in turn, depends partly on public policy). 

An alternative possibility is that the shock does not trigger traditional contractionary dynamics, with growth rebounding rapidly to its pre-COVID-19 path. The expansion that started after 2013Q1 might then be construed to have been punctured by a sharp but temporary drop in activity— constituting, with the periods before and after the COVID-19 crisis, part of a single ongoing “double-peak” expansion that started after 2013Q1.

The Committee will therefore only classify this episode when incoming data clarify the duration and severity of the downturn, and the nature of the ensuing macroeconomic dynamics.

The full statement of the CEPR-EABCN Euro Area Business Cycle Dating Committee is available here.

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What is the Euro Area Business Cycle Dating Committee?

The Euro Area Business Cycle Dating Committee (EABCDC), which is composed of five CEPR researchers, establishes the chronology of recessions and expansions of the eleven-original euro-area member countries plus Greece for 1970-1998, and of the entire euro area from 1999 onwards. The EABCDC is a collaboration between the Centre for Economic Policy Research (CEPR) and the Euro Area Business Cycle Network (EABCN).