European Central Bank (ECB) President Christine Lagarde said on Wednesday that Europe's economic slump, which has been mired in near stagnation for more than a year, is nearing an end.
Lagarde told the Council on Foreign Relations in Washington that production in the euro zone is “recovering and there are clear signs of recovery.” “We never had a recession, but it was a very slow and poor one. [but] There is tremendous employment and a job market. ”
The ECB is almost certain to cut rates at its next meeting in June, providing some support for growth, but what happens next is increasingly uncertain.
Photo: AFP
Part of the blame is at the Federal Reserve, where Chairman Jerome Powell said on Tuesday that officials are taking longer than previously expected to reduce borrowing costs after a series of alarmingly high inflation rates. He suggested that he would wait.
If European monetary easing continues for a long time without the U.S. taking similar measures, the euro could weaken, Lagarde said, even though officials are not targeting a specific level. , said it would monitor changes “very closely”.
“While we have a single mission with the primary objective of price stability, it is clear that we must take into account the impact of exchange rate movements on inflation,” he said. “Currency fluctuations can affect inflation through imported inflation.”
Tensions in the Middle East are another risk factor, he added.
European economies face multiple challenges, from supply chain disruptions in the wake of the COVID-19 pandemic to an energy crisis after Russia's invasion of Ukraine, but clean energy and clean energy are among Brussels' top priorities. We may still be facing our biggest challenge: digital transition. Additional investments of approximately €620 billion (US$660 billion) per year will be required over the next few years.
From artificial intelligence to solar panels, computer chips to batteries, the EU is rapidly losing ground to other world powers in innovation.
The EU is put at a further disadvantage as China and the United States pour billions of dollars in state aid to support their vital industries.
What is needed is “fundamental change”, former ECB president Mario Draghi said in a speech in Belgium on Tuesday, pointing to “other regions”. [that] I don't play by the rules anymore. ”
“Our main competitors are taking advantage of the fact that they are continental-sized economies. We have a similar natural scale advantage in Europe, but fragmentation is holding us back. ” Draghi said.
The former Italian prime minister, who is increasingly attracting attention as a possible successor to Ursula von der Leyen as European Commission president, is expected to submit a report on the issue in the summer.
Additional coverage by AFP
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