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Gerard Moore 19 / March / 22

The eurozone economy will grow strongly this year, because of what?

The eurozone economy will grow strongly this year
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The head of the Central Bank of Germany, as well as a member of the Board of Governors of the European Central Bank, Joachim Nagel, expressed the opinion that military actions in Ukraine are unlikely to lead to stagflation in Germany. According to him, there are no signs of rising wage prices in the country yet, although the consequences of the war will increase inflation due to economic growth.

The decision taken by the European Central Bank is to stop buying bonds due to flexibility in terms of raising interest rates.

According to the governor, this decision is good and balanced, because preliminary interaction during high uncertainty will not be as effective as flexible timely solutions.

His comments were also supported by the President of the European Central Bank, Christine Lagarde, who said that despite the war in Ukraine and the subsequent high commodity prices, the eurozone economy will grow strongly this year.

However, the governor of the Central Bank of Spain, Pablo Hernandez de Cossa, does not have such optimistic views. According to him, the shock of war increases the likelihood of a so-called "war". "Secondary effects" that can keep inflation at a high level while employees strive for higher wages. In addition, he noted that the rise in energy prices could lead to a reduction in real incomes of the population and a reduction in price pressure in the medium term. Nevertheless, the significant negative consequences for the eurozone economy may be significant in the short term.

The ECB's chief economist predicts that due to the war in Ukraine, the economy of the Old Continent will shrink from 0.3 to 0.4 percent.


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