ZCZC
BCN-19
ECB-ECONOMY-GROWTH-EUROZONE
ECB’s Lagarde calls for policy mix to empower EU internal market
FRANKFURT, Nov. 23, 2019 (BSS/Xinhua) – The new president of the European
Central Bank (ECB) Christine Lagarde on Friday stressed the need for moving
towards a new European policy mix to drive the internal growth of the euro
zone.
Lagarde, while addressing the 29th Frankfurt European Banking Congress,
said the ECB’s monetary policy will undergo a strategic review that is “due
to begin in the near future,” adding that the ECB is continuously monitoring
the side effects of its policies.
On the other hand, she noted that the monetary policy could achieve its
goal faster and with fewer side effects if other policies were supporting
growth alongside it.
One key element of the policy mix is the fiscal policy, Lagarde said,
calling for investment that is “more productive, more digital and greener” as
an important part of the response to current challenges.
She said the governments in the euro zone have a common interest in
maintaining sufficient levels of public investment, which has been some way
below its pre-crisis levels.
She also called for “empowering” the European internal market by completing
the digital single market, the capital markets union and the single market in
services, which she said are “building blocks of the European economy of the
future”, in addition to the important task of completing the economic and
monetary union.
Lagarde cited new studies which estimated that the full implementation of
the Services Directive would lead to gains in the order of 380 billion euros
(420 billion U.S. dollars), while completing the digital single market would
yield annual benefits of more than 170 billion euros.
The European economy has been facing various challenges this year. The
European Commission in early November cut its forecasts for the area’s growth
in 2019 and 2020 to 1.1 percent and 1.2 percent, respectively. Germany, the
bloc’s largest economy, narrowly avoided a technical recession in the third
quarter.
In an analysis of the global economy, Lagarde noted changes of “a more
structural nature,” apart from uncertainties in global trade that have been
affecting Europe’s export sector.
She spoke of the “moment of opportunity” for Europe, saying that Europe
needs to innovate and invest to respond to these challenges and preserve its
competitiveness in the longer run, highlighting the benefits of a strong
domestic demand in providing resilience and facilitating rebalancing.
Succeeding Mario Draghi, Lagarde officially took office as new chief of the
ECB in November. The policy package that the ECB rolled out in September,
including an interest rate cut and a massive bond-buying program, has been
drawing mixed responses from the market and the political circles.
BSS/XINHUA/HR/1430