Lagarde: 2023 economy will be ‘much better than feared’ | Aici

DAVOS – The eurozone economy is “better” this year than initially feared, European Central Bank chief Christine Lagarde said, as hopes grow that the country can avoid a painful recession.

“The economic news has gotten better in recent weeks,” Lagarde told an audience at the World Economic Forum in Davos.

The rhetoric has changed from talk of a recession in the 20-nation club to “a slight contraction,” he said, with some major economies like Germany likely to escape the deal entirely.

The ECB expects growth of 0.5 percent in the euro area in 2023, according to its latest forecast.

“So it wasn’t a brilliant year, but it was much better than we feared,” Lagarde said.

The cautious optimism comes as energy prices, which rose last year because of the war in Ukraine, began to ease.

Warm winter weather has also helped, reducing fears of gas shortages.

Lower energy prices contributed to a slowdown in eurozone inflation, which reached 10.6 percent in October.

Consumer price inflation slowed to 9.2 percent in December, reinforcing expectations that inflation has passed its peak.

But Lagarde warned that the cost of living is still “too high”.

The ECB has already raised interest rates aggressively to curb inflation, raising its benchmark rate by 2.5 percent since July.

Lagarde confirmed that more interest rate hikes would follow to bring inflation back to the ECB’s two percent target.

“We will stay the course,” Lagarde said.

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