European Central Bank Prez Lagarde Warns Globalization Might Hurt Rather than Help EU

  • European Central Bank President Christine Lagarde cautioned that the globalized nature of the euro area’s economy makes it quite vulnerable to systemic shocks from supply chain disruptions.
  • “There are signs that the global economy could increasingly be a source of shocks for Europe rather than a stabilizer against volatility,”  Lagarde warned. 
  • “Faced with historically long delivery times, global manufacturers’ stockpiling of inputs continues to run higher than before the pandemic,” Lagarde explained.

Zoe Schneeweiss from Bloomberg writes:

“European Central Bank President Christine Lagarde warned that the globalized nature of the euro area’s economy makes it highly vulnerable to systemic shocks from supply chain disruptions. 

“There are signs that the global economy could increasingly be a source of shocks for Europe rather than a stabilizer against volatility,”  Lagarde said. 

Bottlenecks affect the “euro area more than other economies by virtue of our exposure to globalization,” she said.   

In the 2021 Per Jacobsson Lecture at the International Monetary Fund on Saturday, Lagarde highlighted an issue that’s currently upending world commerce, from shipping to semiconductors to food.

The just-in-time inventory management that has ruled global trade for decades is “highly vulnerable to systemic shocks,” Lagarde said. 

This “imported volatility” might increase rather than decrease, she said…”

See full story here.

 

 



Categories: Business, Government, International

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