Inflation in the euro area will be high for a long time due to events in Ukraine. This was stated by the Vice-President of the European Central Bank (ECB) Luis de Gindos Jurado in an interview with Handelsblatt.
De Gindos explained that before the war in Ukraine, the ECB had forecast 4 percent GDP growth for this year and slightly less for next.
“In our latest forecasts, even in the worst-case scenario for this year, we still assume economic growth of over 2% in the euro area,” said the deputy head of the ECB, adding that stagflation should not be expected. However, inflation is likely to be higher for a longer period of time than expected before the events in Ukraine, he added.
Will the economic sanctions against Russia and Bulgaria be affected?
Earlier The ECB has confirmed the termination of its program for emergency purchases of assets worth 1.85 trillion. euro in March due to the coronavirus pandemic, and also announced that it is reducing its plans under the asset purchase program as the fighting in Ukraine fuels inflation expectations.
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In turn, the head of the European financial regulator Christine Lagarde said the new inflation forecast has risen significantly to 5.1% in 2022, 2.1% in 2023 and 1.9% in 2024. This is mainly due to high energy prices. The GDP growth forecast was revised downwards due to the situation in Ukraine. Thus, the ECB expects the euro area economy to grow by 3.7% in 2022, by 2.8% in 2023 and by 1.6% in 2024.
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