In her debut speech as European Central Bank (ECB) Chief, at the European Banking Conference in Frankfurt, Christine Lagarde urged the member nation to invest and innovate in order to boost growth in the region. She warned the nations that since the eurozone economy is expected to grow at much lower rate than previously forecast, i.e. 1.1%, the European Union should no longer rely on its exports for increasing economic growth.
She said, “More dynamic internal growth offers a way to improve the functioning of the euro area and to accelerate crisis recovery.” She added,” There is a case for investment in a common future that is more productive, more digital and greener.”
Lagarde asked the governments of the member nations to strengthen the internal market by encouraging private sector investment. She called the ongoing trade war between the US and China the keep factor plummeting global growth.
Lagarde said, “Ongoing trade tensions and geopolitical uncertainties are contributing to a slowdown in world trade growth, which has more than halved since last year. This has in turn depressed global growth to its lowest level since the great financial crisis.”
“Public investment in the euro area remains some way below its pre-crisis levels. The share of productive expenditure in total primary expenditure – which in addition to infrastructure includes R&D and education – has also dropped in nearly all euro area economies since the crisis,” she said.
“We face a global environment that is marked by uncertainty. But I believe that, if we approach this challenge in the right way, it can also be a moment of opportunity.” Lagarde added, “We are starting to see a global shift — driven mainly by emerging markets — from external demand to domestic demand, from investment to consumption and from manufacturing to services.”
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