Klaus Regling at Eurogroup press conference, May 2022

Transcript of remarks by ESM Managing Director Klaus Regling
Press conference after Eurogroup meeting
23 May 2022

Good evening. Let me complement what Commissioner Gentiloni just said on the latest Commission forecast and give you quickly a market perspective. I was on an investor roadshow in Singapore last week and therefore could discuss there with investors the economic outlook in Asia and of course, also how investors look at Europe at the current juncture. In general, the market consensus concerning euro area growth for this and next year is very much in line with the Commission's projections. This includes obviously the risk scenarios which are mentioned in the Commission forecast and which are also discussed in the markets.

Apart from the war in Ukraine and its economic consequences, events in China and the US, of course, also play a role for the world economy and therefore very much also in Asia. In China, the renewed wave of Covid and zero-Covid policy trigger additional lockdowns in major cities, including the port of Shanghai, and that causes additional supply chain problems, and also a negative impact on Chinese growth and therefore on world trade and the global growth outlook.

In addition, there are increasing concerns among financial market participants about the economic developments in the US. So there are these negative developments outside Europe also. Nevertheless, for Europe, the positive factors that I mentioned in our last regular meeting – which are the strong growth carryover from last year, the accumulated savings from the pandemic, and the positive aspects of the Recovery and Resilience Plans – are in place, and they are also recognised by financial market participants.

Just a quick word on banking union. I have said it here many times that the ESM fully supports the Eurogroup President's work to reach an agreement by June on a work plan. We at the ESM follow this work very closely because it's important for the euro area economy and for the good functioning of the euro area. Banking union, together with the capital markets union, would lead to more cross-border capital flows, therefore a better allocation of capital in Europe. That would mean over time stronger potential growth, but it would also mean more risk-sharing and therefore less fragmentation in the euro area. All that would make the euro area and the euro more attractive for international investors and therefore for the international role of the euro. Thank you.