Europe’s economy is nearing the end of a malaise that has resulted in more than a year of near stagnation, European Central Bank (ECB) President Christine Lagarde said on Wednesday.
Output in the eurozone is “recovering and we are clearly seeing signs of recovery,” Lagarde told the Council on Foreign Relations in Washington. “We haven’t had a recession, but it’s been very, very slow and meager, [but] you have an employment and a job market which is phenomenal.”
The ECB is almost certain to cut interest rates at its next meeting in June — offering some support for growth — although what happens after that is increasingly uncertain.
Photo: AFP
That is in part because of the US Federal Reserve, whose chair Jerome Powell on Tuesday signaled that officials would wait longer than previously anticipated to reduce borrowing costs following a series of surprisingly high inflation readings.
A prolonged period of monetary easing in Europe with the US not acting to the same extent could dent the euro, with Lagarde saying officials would watch fluctuations “very carefully,” despite not targeting a particular level.
“While we have a single mandate with a primary objective of price stability, obviously we have to take into account the impact that exchange-rate variations will have on our inflation,” she said. “That movement of currencies may have an impact on inflation by way of imported inflation.”
Tensions in the Middle East are another risk factor, she added.
From supply-chain disruptions following the COVID-19 pandemic to an energy crisis after Russia’s invasion of Ukraine, Europe’s economy has faced multiple challenges, but it mignt yet face its biggest — the clean energy and digital transitions that Brussels has made its priority in the coming years would require additional annual investment of nearly 620 billion euros (US$660 billion).
From artificial intelligence to solar panels, from computer chips to batteries, the EU is fast losing ground on innovation to other global powers.
The EU has been put further on the back foot as China and the US have plowed billions of dollars of state aid to prop up their critical industries.
What is needed is “radical change,” former ECB president Mario Draghi said during a speech in Belgium on Tuesday, pointing to “other regions [that] are no longer playing by the rules.”
“Our major competitors are taking advantage of the fact that they are continental-sized economies. We have the same natural size advantage in Europe, but fragmentation is holding us back,” Draghi said.
The former Italian prime minister, increasingly touted as a potential successor to Ursula von der Leyen as European Commission president, is to present a report on the issue in the summer.
Additional reporting by AFP
Huawei Technologies Co’s (華為) latest smartphones carry a version of the advanced made-in-China processor it revealed last year, results from an independent analysis showed. This underscored the Chinese company’s ability to sustain production of the controversial chip. The Pura 70 series unveiled last week sports the Kirin 9010 processor, research firm TechInsights found during a teardown of the device. This is a newer version of the Kirin 9000s, made by Semiconductor Manufacturing International Corp (SMIC, 中芯) for the Mate 60 Pro, which had alarmed officials in Washington who thought a 7-nanometer chip was beyond China’s capabilities. Huawei has enjoyed a resurgence since
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li
Dutch brewing company Heineken NV on Friday announced an investment of NT$13.5 billion (US$414.62 million) over the next five years in Taiwan. The first multinational brewing company to operate in Taiwan, Heineken made the statement at a ceremony held at its brewery in Pingtung County. It also outlined its efforts to make the brewery “net zero” by 2030. Heineken has been in the Taiwanese market for 20 years, Heineken Taiwan managing director Jeff Wu (吳建甫) said. With strong support from local consumers, the Dutch brewery decided to transition from sales to manufacturing in the country, Wu said. Heineken assumed majority ownership and management rights
GROWTH DRIVERS: The firm expects to benefit from generative AI applications for smartphones, higher average selling price of flagship chips and market share gains Smartphone chip designer MediaTek Inc (聯發科) yesterday said it estimates that revenue would expand at an annual rate of about 15 percent this year, as a proliferation of generative artificial intelligence (AI) applications for premium smartphones are fueling demand for its flagship smartphone chips. It expects its smartphone chip revenue to outgrow the company’s average growth rate this year, benefiting primarily from the higher average selling price of its flagship smartphone chips and market share gains. The flagship chip revenue is to soar 50 percent year-on-year this year, MediaTek told an investor conference yesterday. As a whole, this year’s gross margin is