European economy will never regain its former power, says ECB head Lagarde in Davos

President of the European Central Bank Christine Lagarde appears on a video screen during the panel "The Global Economic Outlook" on the last day of the forum's annual meeting in Davos, Switzerland, Friday, Jan. 19, 2024. (AP Photo/Markus Schreiber)
By Dénes Albert
2 Min Read

European Central Bank President Christine Lagarde said she does not expect a return to economic “normality” in 2024, despite seeing a balancing of some data over the past 12 months.

Speaking on a Bloomberg panel at the World Economic Forum in Davos, Switzerland, Lagarde described the post-pandemic period as “strange, extraordinary and hard to analyze” and identified three trends that have begun to normalize over the past year: consumption, trade and inflation.

The pandemic led to lower spending and increased savings for people, while global trade was also disrupted. In October 2022, eurozone inflation hit 10.6 percent, but slowed in 2023, dropping to 2.9 percent in December.

“In ’23, we saw the beginning of normalization. When you look at consumption, for example, around the world, consumption is still a driving force for growth, but the tailwind that we benefited from is gradually fading,” Lagarde said on Friday.

She warned that Europe will not return to its previous economic position, also hinting at her broader definition of a “new normality.”

“Around the world, inflation is falling, and we saw it in November (in) both headline and core inflation. So, that’s what I call the normalization that we saw in ’23,” she said, adding somewhat cryptically, “And maybe you’ll give me the floor another time to talk about how it is not normality that we are heading toward.”

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