ECB President Warns Middle East Conflict Could Drive Inflation and Slow Growth

Brussels (ANTARA) - The economic outlook for the Eurozone remains uncertain, with inflation risks leaning upwards and economic growth risks leaning downwards, despite recent peace agreements in the Middle East, warned European Central Bank (ECB) President Christine Lagarde on Monday (22/6).

Speaking during a session of the European Parliament’s Committee on Economic and Monetary Affairs in Brussels, Lagarde stated that conflicts in the Middle East have driven up energy prices, increased inflation, and burdened economic activity within the Eurozone.

“The outlook remains uncertain, with the risks of rising inflation and the risks of declining economic growth,” said Lagarde.

She welcomed the peace agreements in the Middle East but warned that the situation remains fragile, with the risk of setbacks or new escalations.

The full implications of war on inflation and medium-term growth will depend on the intensity and duration of energy price shocks, as well as the scale of indirect impacts and their secondary effects, she added.

Eurozone inflation rose to 3.2 per cent in May from 3.0 per cent in April, primarily driven by higher energy inflation, which exceeded 10 per cent in both April and May.

Meanwhile, inflation excluding energy and food also increased to 2.6 per cent in May, partly reflecting the initial indirect impacts of higher energy prices.