As the U.S. sees record coronavirus cases, the ECB’s Lagarde says the worst is over in Europe

European Central Bank President Christine Lagarde said the recovery from the coronavirus pandemic will be “restrained” and will change parts of the economy permanently.

While the worst of the crisis might be over, it’ll take time for the “phenomenal” jump in savings to trickle into higher investment and spending, she said in a webinar on Friday. The recovery will also be “incomplete” as trade is unlikely to return to pre-crisis levels and productivity may be weaker.

“We probably have passed the lowest point, and I say that with some trepidation,” Lagarde said. “The airline industries, the hospitality industries, the entertainment industries are going to come out of that recovery process in a different shape, and some of them will probably be hurt irremediably.”

Her remarks follow comments from ECB Chief Economist Philip Lane, who cautioned earlier this week that early signs of economic improvement may not be a good guide to the speed and robustness of the recovery.

The ECB has rolled out a 1.35 trillion-euro ($1.52 trillion) emergency bond-buying program and a suite of other tools including cheaper and looser financing for banks to help steer Europe out of the deepest peacetime recession in almost a century.

Lagarde noted the “massive” increase in government and company debt that she said must be repaid. But she also said monetary policy and fiscal policy are working hand-in-hand, and interest rates are exceptionally low.

This crisis could be transformational because “there will be industries that will arise from those changes,” she said.

The president called on policy makers to be extremely attentive to those that are most vulnerable, including the poor, the young and women, who have been the most affected by the crisis.

“Many work in hospitality, short-term contracts, those jobs will go first,” she said. “And women, they’re always affected more in times of crisis.”

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