A tourist wear a protective mask in front of the Trevi Fountain downtown Rome, on March 3, 2020. - Italy urged tourists spooked by the coronavirus not to stay away, but efforts to reassure the world it was managing the outbreak were overshadowed by confusion over case numbers. Hotel bookings in Milan have plummeted to 20 percent, compared to nearly 90 percent normally at this time of year, while in Rome, far from the northern hotspots over 50 percent of bookings have been cancelled until the end of March, hotel association Federalberghi said. (Photo by Alberto PIZZOLI / AFP) (Photo by ALBERTO PIZZOLI/AFP via Getty Images) ALBERTO PIZZOLI

Growth in the euro zone is likely to be very sluggish over the next decade, experts have warned, and the forecasts were bleak even before the new coronavirus hit the region. "Even before the coronavirus outbreak, dark clouds had been gathering over the euro zone economy, with Italy in the eye of the storm," economists at ING warned Tuesday. "Over the next 10 years, the region's potential growth rate will likely slow to a crawl while Italy faces a stagnation far worse than anything Japan has seen," ING's Carsten Brzeski, Bert Colijn and Inga Fechner said in a note. Europe, and its single currency area of 19 countries within the euro zone, has experienced a prolonged financial crisis in the past decade and there were warning signs before it was hit with a major health crisis. In the fourth quarter of 2019, for example, euro zone growth was just 0.1% quarter-on-quarter, marking its slowest growth rate since 2013, with its largest economies Germany seeing flat growth, and Italy and France seeing a 0.3% and 0.1% contraction, respectively. Looking ahead, economists fear that the region is looking at a decade of meager growth expectations at best. "In the next 10 years, demographic and structural headwinds, and a limited appetite for reform, could push the bloc's potential growth rate to less than 1%, down from the annual average pace of 1.4% of the previous decade," ING's economists said.

Coronavirus

President Donald Trump's trade war with China and the imposition of tariffs on imports — and the threat of heavy duties on Europe's auto industry — had weighed heavy on growth in 2019, and on forecasts. That, alongside political uncertainty in its largest economy Germany, divisions over the EU budget and Brexit, were all factors for the regional economy to contend with. In the fall, the European Commission had forecast 1.2% growth for the euro zone in 2020 and 2021, and 1.4% for the entire European Union (excluding the U.K.). But now the outbreak of the flu-like virus is certain to dent growth forecasts in the region in the short term, economists say, and will force the European Central Bank (ECB) to act.

European Central Bank (ECB) President Christine Lagarde addresses a news conference on the outcome of the meeting of the Governing Council in Frankfurt, Germany, January 23, 2020. Ralph Orlowski | Reuters