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ECB’s Lagarde confident on outlook despite virus surge

Forecasts remain possible, she says, even as infections rise and vaccination programmes stutter

Updated 5 years ago · Published on 13 Jan 2021 11:10PM

ECB’s Lagarde confident on outlook despite virus surge — European Central Bank president Christine Lagarde says that despite problems with the EU’s Covid-19 vaccine programmes and rising cases, there is ‘no reasons to believe’ that forecasts are wrong. – Twitter pic, January 13, 2021

FRANKFURT AM MAIN – European Central Bank president Christine Lagarde said Wednesday that she remained confident of the eurozone’s recovery in 2021, despite renewed virus curbs and a challenging start to vaccination programmes.

The ECB’s forecasts remain “very clearly plausible”, Lagarde said at an online conference hosted by Reuters, adding she had “no reasons to believe our forecast is wrong at this point in time”.

The ECB in December forecast economic growth in the 19-nation euro area at 3.9% in 2021, after a fall estimated at 7.3% in 2020.

A resurgence in Covid-19 cases has seen several eurozone nations impose tougher coronavirus restrictions, dampening economic expectations at the start of the year, while vaccination rollouts, which Lagarde described as “laborious”, have faced criticism.

However, the ECB’s forecasts are “predicated on lockdown measures until the end of the first quarter,” Lagarde said.

She cautioned that it would become “a concern” if member states need to extend their shutdowns “after the end of March”.

But Lagarde said some uncertainties – which she called “dark clouds over our heads” – have been cleared, including a post-Brexit trade deal, and the outcome of Senate races in the US state of Georgia giving Joe Biden more legislative stability as president.

“From that basis we start on a more positive basis,” Lagarde said.

Lagarde also welcomed the EU-wide agreement on its €750 billion (RM3.69 trillion) coronavirus recovery fund, and reiterated pleas for fiscal policy to support monetary efforts.

“Stimulus needs to be continued and properly targeted to those measures that would be most conducive to growth,” said Lagarde, a former French finance minister and ex-head of the International Monetary Fund.

At its last monetary policy meeting in December, the Frankfurt-based ECB boosted its pandemic emergency bond-buying programme to 1.85 trillion euros and extended it to March 2022.

The ECB’s governing council meets next week to discuss future monetary policy moves. – AFP, January 13, 2021