Euro zone needs to strengthen domestic demand: ECB's Lagarde
FRANKFURT - The euro zone needs to create more of its economic growth at home, including via greater public investment, if it is to withstand weakness abroad and become more balanced internally, new European Central Bank President Christine Lagarde said on Friday.
“The answer lies in converting the world’s second largest economy into one that is open to the world but confident in itself – an economy that makes full use of Europe’s potential to unleash higher rates of domestic demand and long-term growth,” Lagarde said. Her predecessor Mario Draghi had also called for greater spending and investment by countries that run surpluses, such as Germany, but he was never so specific and his pleas fell on deaf ears in Berlin.
Unlike Draghi, who took office at the height of the euro zone’s debt crisis in 2011 and took immediate, bold steps to stop the market rout, Lagarde was not under pressure to change the ECB’s policy stance just yet. In a symbolic olive branch to the host country of the ECB, Lagarde began her speech by greeting the audience in German and promised to deepen her knowledge of that language.
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