Economic growth “is not a lost cause” in Europe, European Central Bank (ECB) President Christine Lagarde, calling for a “vigorous and swift response” to improve productivity in eurozone member countries.
“In Europe, we have talent, a high level of education, and the ability to save, but we are not managing to mobilize all of these resources,” Ms. Lagarde said, among other things, in an interview with the French newspaper Ouest-France.
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The ECB forecasts that inflation will reach 0.9% in the eurozone in 2026.
When asked by the regional newspaper whether she considers it feasible to revive economic growth “on a continent with an aging population that is already highly developed,” the former managing director of the International Monetary Fund (IMF) and former French Minister of Economy and Finance described the question as “legitimate.”
“Demographics play an important role. But we can offset them by improving productivity,” she emphasized. “Even with a smaller workforce, if we are more efficient, we will achieve growth”—it is not a “lost cause,” he insisted.
However, initiatives must be taken to achieve this, and “I believe that U.S. policy, which has changed dramatically in recent years, must spur us to a vigorous and swift response,” he added.
On Thursday, the ECB raised its key interest rates, a decision aimed at curbing inflation, as that rate “is expected to remain well above its target for an extended period,” but it makes credit more expensive for real estate, business loans, and the cost of financing government debt.
“The ECB’s mission is to ensure price stability,” Ms. Lagarde explained, recalling the “target of 2% inflation over the medium term”—a goal that is not currently being met, as inflation stands at “3.3% in the eurozone,” which constitutes a “major shock” due to the war in the Middle East and the destruction of hydrocarbon refining capacity, “especially in Russia,” and its duration will “likely be longer” than previously estimated.
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Source: APE-MPE
