Challenging Moments for ECB Chief Christine Lagarde

The ECB which plays a similar role to the U.S. Federal Reserve is faltering.

The eurozone has a meager GDP of 0.2 percent for the third quarter. In Germany, GDP is only at 0.1 percent, though it is the largest economy in Europe.

Some of the troubles facing the eurozone are high unemployment, low profits, and less growth. This is extremely worrying for the ECB President Christine Lagarde.

Christine Lagarde was formerly the head of the IMF. She succeeded Mario Draghi who was holding the reins of ECB from 2011 till 2019.

The European Central Bank brought in quantitative easing to take care of the financial crisis growing in the eurozone, by reducing long-term interest rates through bond purchases.

Lack of internal growth, however, is the chief factor that is causing rising crisis in the eurozone. Experts say that low-interest rates are not sufficient to bring in growth or stimulate employment. Countries will have to bring in financial stimulus through spending on infrastructure and development.

The current crisis facing ECB is a budget deficit, which has to be addressed.

Lagarde has given a strong hint stating that the ECB has done enough to stimulate growth. Countries like Germany have to spend more to stimulate growth, she says. Though Lagarde has not sufficient experience to lead a central bank, she is reputed to be a skilled negotiator who can pull up the best from the worst scenario.

The trade war between the U.S. and China has brought a slowdown in the global economy. If the eurozone does not rise up to the current financial crisis, it will further dampen growth in the euro countries, which is going to affect world trade.

Jean Pisani-Ferry from Peterson Institute, International Economics states that growth has slowed down since early 2018 in the eurozone, and recession risk is growing while there is no space for monetary stimulus from the ECB.

David Sandefur

David Sandefur has gained a lot of experience in business and market analysis. He is one of the top assets for Chemical Industry Reports news portal. He is assigned with the title of “Gem” owing to his efficient way of managing the allotted responsibilities. He is competent in expressing terminologies and concepts related to business, finance, market, and industries. He had worked as a business analyst in the production industry for almost 4 Years with a total experience of 7 Years. These qualities and experience have served him the role of leading the columnists’ team at Chemical Industry Reports news portal. He has accomplished his Master’s degree in Accounts.

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