Christine Lagarde: IMFC Statement

Statement by Christine Lagarde, President of the ECB, at the fifty-fourth meeting of the International Monetary and Financial Committee

The global economy has proven surprisingly resilient in the face of high uncertainty. The conflict in the Middle East continues to expose energy markets to sharp swings. Trade tensions and protectionist measures are weighing on confidence and contributing to a reconfiguration of trade flows. The global economy has held up thanks in part to the rise of artificial intelligence, with investment in technology supporting activity and trade, particularly in economies integrated into technology value chains. Risks nonetheless remain tilted to the downside for growth and to the upside for inflation. A return to an international economic order grounded in openness, predictability and the rule of law would help trade and investment flourish.

Despite global headwinds and the ongoing energy shock, the euro area economy has so far proved resilient. Growth was broad-based across most euro area countries and sectors in the first half of 2026. The September ECB staff projections foresee growth of 0.9% in 2026, 1.4% in 2027 and 1.5% in 2028.

As the energy shock fades over the medium term, the projections see domestic demand benefitting from a recovery in real income over the medium term, driven by lower energy inflation and a resilient labour market. Rising government spending on infrastructure and defence, complemented by investment in AI and digital technologies, should also support growth. Export growth should pick up on the back of strengthening foreign demand, also driven by AI.

The medium-term outlook is surrounded by uncertainty over how intense and long-lasting the Middle East conflict will be, and how the resulting shocks might propagate through the economy. Risks to growth are assessed to be on the downside.