Lagarde: Trade tensions, uncertainty could drag down eurozone growth

Trade tensions and related uncertainty could drag down eurozone growth by stifling exports and lowering investment and consumption, ECB President Christine Lagarde said. However, if trade and geopolitical tensions were resolved quickly, it could improve sentiment and boost economic activity, she added.

"The balance of risks remains slightly unfavourable, with trade tensions and related uncertainty likely to drag down euro zone growth by suppressing exports and dragging down investment and consumption," Lagarde said at a conference.

She added that the deterioration in sentiment in financial markets could lead to tighter financing conditions and increased risk aversion, making companies and households less willing to invest and consume.

"Geopolitical tensions such as Russia's unjustified war against Ukraine and the tragic conflict in the Middle East remain major sources of uncertainty. On the other hand, if trade and geopolitical tensions were resolved quickly, this could improve sentiment and boost economic activity," the ECB president noted.

She noted that growth in the eurozone could also be stimulated by government armament and infrastructure programs. (PAP Biznes)

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