August 9, 2022

Draghi Receives Warm Welcome in Germany

Invited by the economy council of the governing Christian Democratic Union party, Mr. Draghi warned at an economics conference about the perils of inflation as the world recovered from the global financial crisis.

His remarks won repeated applause from nearly 1,000 audience members, most of them company executives who have been critical of Chancellor Angela Merkel’s economic policies.

Mr. Draghi, governor of the Italian central bank, was nominated this month at a meeting of euro zone finance ministers to succeed Jean-Claude Trichet as European Central Bank president in October, when Mr. Trichet’s term ends. Mr. Draghi will need to be endorsed by European Union leaders, but that is considered a formality.

His candidacy has been the subject of strident commentary in the German news media, which has asserted that a banker from a south European country would be unsuited for a job that demanded fiscal and monetary discipline.

Even Mrs. Merkel, who was one of the government leaders in the euro zone countries to withhold support from Mr. Draghi at the early stages of his candidacy, only recently spoke out in favor of him.

Mr. Draghi’s advisers said it was not certain that he and Mrs. Merkel would meet because of scheduling conflicts. Mr. Draghi was to return to Italy late Wednesday afternoon. Mrs. Merkel, in Paris for meetings at the Organization for Economic Cooperation and Development, was to return to Berlin on Wednesday night to address the same conference.

During his 20-minute keynote address, Mr. Draghi said the recovery of the world economy was continuing, with overall gross domestic product expected to expand 4.4 percent this year, and 6.5 percent in emerging countries.

“However, the crisis is not over,” he warned. “While global growth has been gathering robustness, it is very uneven.”

Turning to the euro zone countries, Mr. Draghi said it was crucial in a monetary union that each member country satisfy three conditions: price stability, fiscal discipline and national economic policies conducive to growth.

The first condition “was and is ensured by the E.C.B,” Mr. Draghi said, “but in some countries, we do not have the second and the third. The primary responsibility for a response to a lack of confidence must be national.”

Underscoring the interdependence of euro zone countries, he noted that the sovereign debt crisis of three countries — which he did not name — whose combined gross domestic product amounted to about 6 percent of the total euro zone G.D.P. held “the potential to have a big systemic impact.”

In a specific reference to German industrialists, he said that, “with the notable exception of Germany,” economic growth “remains feeble in the advanced countries, too slow to help redress seriously weakened fiscal balances and unemployment rates.”

In emerging countries, Mr. Draghi said, “there are signs of overheating, with large capital inflows carrying a heightened potential for disruption. Commodity and oil prices have been under heavy upward pressure.”

Article source: http://feeds.nytimes.com/click.phdo?i=71e7fc893cb3da1b74ed9b22a9bd78df

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