Economic activity in the euro zone has slowed this year compared to 2022, but it will be much higher than initially expected, despite inflation and the energy crisis, European Central Bank President Christine Lagarde said on Thursday, as quoted by AFP. and Agerpress.

“In recent weeks, the data has become much more positive, which leads us to believe that the current year will not be bright, but much better than we feared,” Christine Lagarde said at the Davos Forum.

In particular, the labor market in Europe “has never been so dynamic with the number of unemployed at the lowest level in the last 20 years,” the ECB president added.

Christine Lagarde mainly mentioned Germany, the first economy in Europe to avoid recession in 2023, despite a still tense situation due to the energy crisis, according to statements made the other day by Chancellor Olaf Scholz.

Battered by inflation that has driven up production costs in industry, the engine of its economy, Germany appears to be holding up better than expected thanks to strong consumption and substantial government aid.

Good news from the Eurozone, but inflation remains high

For its part, the European Commission forecasts a contraction in gross domestic product for both the eurozone and the EU as a whole in the last quarter of 2022 and the first three months of 2023, with a subsequent recovery for the rest. year

However, Christine Lagarde pointed out that inflation remains too high, even if the pace of price growth has slowed after peaking at more than 10% last October.

“By all indicators, inflation remains too high. We will maintain the rate until we bring inflation to 2% at the appropriate time,” Lagarde said.

The European Central Bank has raised its key interest rate by 250 basis points in its last four policy meetings, an unprecedented increase in the cost of credit in such a short period, and plans to maintain the same direction in the coming months to challenge persistently lower inflation.

The latest statistics show that annual inflation in the eurozone slowed to 9.2% in December, largely due to lower energy costs.

However, core inflation, which excludes volatility in food and energy prices, continued to rise to 5.2%, dampening hopes that the recent price surge has ended.