Lagarde: 25% USA duties would weigh 0.3% on Eurozone GDP | EUROtoday

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“The analysis of the ECB suggests that a 25% US tariff on imports from Europe would reduce the growth of the euro area of ​​about 0.3 percentage points in the first year. A European response in the form of an increase in rates on US imports would further increase this percentage of about half a percentage point ». This was stated by the president of the ECB Christine Lagarde in his intervention in the Economy Commission to the European Parliament. «The weight of the impact on economic growth would focus around the first year after the increase in rates; Then it would decrease over time, however leaving a persistent negative effect on the production level ».

“The response to the present change within the industrial insurance policies of the United States ought to be better, no minor, industrial integration, each with industrial companions all around the world and inside the EU”, continued the president of the European Central Bank: “The evaluation of the ECB – stated Lagarde – signifies that better integration with the remainder of the world might greater than compensate the losses suffered by the unilateral charges, together with retaliation. In such a state of affairs, solely the nations that undertake isolationist insurance policies threat getting misplaced. It is due to this fact necessary that the EU stays open to commerce and the fast finalization of the latest industrial agreements with different worldwide companions would signify a strong sign ». «We should additionally use these developments as a catalyst to deepen the commerce between EU Member States. It is estimated that the only market has added between 12% and 22% to lengthy -term EU GDP in its first 30 years and the extent of commerce between the Member States has doubled by its creation “. . A deeper single market – added Lagarde – is essential to reduce commercial barriers within Europe and create the necessary staircase so that companies prosperine. “Furthermore, the extra we exploit our market, the extra Europe is answerable for the influence of worldwide fragmentation and exterior shocks on the whole”

The situation of investments and exports

«The manufacturing sector remains in contraction, although the polls indicators are improving. The high internal and global political uncertainty is braking the investments and challenges of competitiveness are weighing on exports. At the same time, the services remain resilient. In addition, the increase in families’ income and a solid labor market are supporting a gradual recovery in consumption, “stated the president of the ECB in his speech. «It is probably going that the excessive uncertainty will curb investments and exports greater than beforehand anticipated. However, progress is predicted to be incurred by greater earnings and decrease debt prices. In addition, exports ought to profit from rising world demand, though this stays topic to developments in worldwide industrial insurance policies ». Lagarde recalled the most recent projections of the ECB workers who present that the economic system will develop by 0.9% in 2025, 1.2% in 2026 and 1.3% in 2027.

Inflation down

«The disinflation course of is nicely began. Headline inflation fell from 2.5% in January to 2.3% in February, primarily as a consequence of a drop in power inflation. Even the fundamental inflation, excluding power and meals, dropped barely from 2.7% in January to 2.6% of February, reflecting a decrease inflation of providers, “continued Lagarde. “Internal inflation dropped barely in February however stays excessive – added Lagarde – since wages and costs of the providers in some sectors are nonetheless adapting to the previous surge in inflation. In addition, the expansion of nominal wages has been moderated throughout 2024 and it will likely be anticipated that it’ll proceed to decelerate within the coming months since actual wages have reached the degrees seen earlier than the surge in inflation, bringing to minor requests for compensation for inflation “.

The uncertainty rises, no commitment on the path of rates

«We are determined to ensure that inflation stabilizes in a sustainable way to our medium -term target of 2%. Especially in current conditions of growing uncertainty, we will follow an approach dependent on data and meeting for meeting to determine the appropriate position of monetary policy. We are not working in advance on a particular rate of rate, “confirmed the president of the ECB.