Activity in the euro zone has slowed down compared to 2022, but this year it will be “much better” than initially expected, despite inflation and the energy crisis, the president of the European Central Bank (ECB) said on Thursday. Christine Lagarde.
“The news has become much more positive in recent weeks,” forecasting that the current year “will not be brilliant, but much better than feared,” Lagarde told the Davos Economic Forum.
The labor market, particularly in Europe, “has never been so dynamic” with the number of unemployed “at the lowest level in the last 20 years,” he stressed.
Lagarde referred in particular to Germany, the largest economy in Europe, which is expected to emerge from recession in 2023, despite the still tense situation due to the energy crisis, according to statements by Foreign Minister Olaf Scholz in an interview on Tuesday with Bloomberg.
Germany, which has been affected by inflation, which raises the production costs of industry, the engine of its economy, seems to be holding up better than expected thanks to robust consumption and significant public aid.
The European Commission forecasts a contraction in Gross Domestic Product (GDP) for both the euro area and the EU in the last quarter of 2022 and the first three months of 2023, before a recovery for the rest of the year.
At the same time, Lagarde highlighted inflation data that remains “too high”, although price rises have slowed after peaking at more than 10% in October.
“Our determination at the central bank is to bring (inflation back to) the 2% target in a timely manner” by taking “all measures to achieve it,” he said.
The ECB has raised interest rates by 2.5 percentage points since July, an increase of unprecedented speed, and plans to maintain this restrictive position in the coming months to try to reduce inflation in a lasting way.
The ECB president also pointed out the need to advance in the digital and green transition, whose financing needs will be very important and for which public money “will not be enough”, for which he urged rapid progress towards the market union of capitals, something that cannot be achieved without political impetus.
“We have to move towards that double transition and the financing needs will be very great to move quickly and be more independent and less vulnerable,” he said.
Source: TSF
