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Thursday, September 10, 2020, 4:26 PM
Strong economic growth in the Eurozone, confirming its forecasts, said the European Central Bank, said its director Christine Lagarde, noting, however, that economic activity has not returned to pre-pandemic levels.
According to Ms Lagarde, the dynamics of the manufacturing sector continues to improve, however, the service sector has recently stopped its dynamics, as a result of the resurgence of the new coronavirus pandemic in some areas.
In this context, the ECB head warned that uncertainty remains high and that the pace of economic recovery will largely depend on the evolution of the reduction of the pandemic, not only in Europe but also around the world.
Ms. Lagarde reiterated the need to maintain an accommodative monetary policy, which, however, should be accompanied by strong fiscal intervention. “In any case,” she said, “the ECB will continue to provide strong support to the liquidity of the economy.”
Forecasts for recession have improved
Regarding the latest macroeconomic projections from Eurosystem experts, Lagarde said they have been revised positively and a relatively minor recession is expected for all of 2020.
Specifically, the real annual GDP of the Eurozone is expected to decline by 8% in 2020 (from the 8.7% recession reported in the June forecast), while for 2021 a growth of 5.0% is expected ( from 5.2% in June) and for 2022 a growth of 3.2% (3.3% in June).
On the inflation front, after the negative data for August, the head of the ECB said that it is expected to remain negative in the near future, but in the medium term, in the context of recovery in demand and combined with the monetary support is expected to strengthen.
Specifically, as he said, the Bank estimates that annual inflation is 0.3% in 2020, 1% in 2021 and 1.3% in 2022.
“Inflation is expected to remain negative in the coming months, it will be positive in early 2021. In the short term, pressures on prices will continue,” he said, adding that “we do not see a risk of deflation in the euro zone. “.
Finally, on the recent rise in the exchange rate of the single European currency, Christine Lagarde reiterated that the ECB does not target specific exchange rates.
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