The strong economic recovery of the eurozone, after two years of pandemic, but also the risks and challenges that remain, pointed out the President of the Eurogroup, Pascal Donahue, during a press conference in Brussels.
The first item on the agenda of today’s Eurogroup was the economic adjustment and resilience of the eurozone, in the presence of the chief economist of the OECD, Lawrence Boone. “Efforts made at national and European level to support the economy from the pandemic crisis were appropriate and on the right scale,” Donachio said.
For his part, Economy Commissioner Paolo Gentiloni stressed that the EU economy recovered much faster from the Covid-19 pandemic crisis than it did during the global financial crisis, which took seven years for the economy to return to normal. pre-crisis levels. The Italian Commissioner said that according to the Commission’s forecasts, in 2022 we will return to pre-crisis levels in terms of eurozone GDP.
The head of the European Stability Mechanism (ESM), Klaus Regling, agreed that the political response to the coronavirus crisis was appropriate. He noted, however, that there are significant differences between the pandemic crisis and the financial crisis, so a comparison can be made. As he said, in the financial crisis there were significant macroeconomic imbalances that needed to be corrected and that was painful. He also noted that in the pandemic crisis, banks were part of the solution.
The issue of corporate solvency was also discussed at the Eurogroup, as Member States are now channeling their support to areas most affected by the pandemic. The Commission has identified five policy areas that will be prioritized. Commissioner Gentiloni said that a year and a half ago everyone was afraid of bankruptcy and unemployment, but surprisingly they remained low, although as he said the areas most affected today are tourism and travel. “Of course we know that challenging the transition from one sector to another is very difficult,” Gentiloni acknowledged, but added that support policies would be important.
Regarding the discussion on the revision of the rules of the Stability and Growth Pact, Pascal Donahue stressed that today was the “first substantive discussion”, which will continue in the coming months. As he said, many views were heard from the governments on issues related to the process of submitting budget plans, the process of budgetary supervision, the coordination of national economic policies, etc. For his part, P. Gentiloni said that in a few weeks the Commission will present its guidelines for fiscal policy in 2023 and in the coming months propose a specific discussion framework for the revision of the Stability and Growth Pact.
Finally, when asked about the high level of inflation in the eurozone, the president of the Eurogroup said that although it was not on the agenda, several ministers raised the issue. “All ministers understand the impact of rising prices on living standards, entrepreneurship and all respond with measures that are appropriate for their economy,” said Donachio. “Our view on the level and nature of inflation has not changed. We expect the high level of inflation to be maintained for longer than we thought. “In general, however, we expect that within the year, these inflationary pressures will begin to subside,” said the president of the Eurogroup.
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