February 28, 2020 / 1:34 PM / in a month

Eurogroup's Centeno: euro zone 'ready to act' on coronavirus impact if needed

LISBON (Reuters) - Euro zone states must be prepared to act in a coordinated way if the coronavirus epidemic proves more than a temporary shock to the bloc’s “resilient” economy, the chairman of euro zone finance ministers Mario Centeno told Reuters on Friday.

Centeno, who is Portugal’s finance minister, said the priority was to take care of those affected and try to contain the spread of the flu-like virus, but that ministers were constantly in contact to assess the impact on the economy.

“It’s the new risk and it’s obviously a downside risk to our economies,” Centeno said in an interview.

“It looks like it’s going to be temporary, but the impact is there, and ... we need to coordinate our actions in case this becomes a more global scenario.”

He said the 19-country euro zone’s economy had “proved quite resilient in the last couple of years to a succession of risks and uncertainties”, adding: “Everybody was expecting some rebound of the economy, and coronavirus is something that we must be very attentive to and ready to act if it’s needed.”

Coordination was key, he said, even if the first response comes at national level.

“We stand ready to act if this becomes a less temporary event,” Centeno said. “If this evolves in a way that is not what we wish, which is a containment of the process, certainly ... Europe will react as united as before in the face of this new challenge.”

The most affected sectors could be offered help, he said, adding that the Easter tourism season would be closely watched.

“This is what the rules are made for, to adapt to these sort of events, especially when they are that negative and impact citizens directly.”

Share prices are on track for their worst week since the global financial crisis in 2008 as virus-related disruptions to international travel and supply chains fuel fears of a global recession.

The International Monetary Fund has said it is likely to downgrade its growth forecast as a result of coronavirus, which has spread to 49 other countries from China, where nearly 80,000 cases have been reported and nearly 3,000 people have died.

“Unfortunately financial markets have been much more affected than we could expect initially. But corrections in financial markets are always happening, so we also must be conservative in the interpretation at this stage,” Centeno said.

“I hope (the market impacts) are temporary in nature and this correction may reverse somehow in the near future.”

Reporting by Ingrid Melander and Sergio Goncalves; Editing by Catherine Evans

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