Medina defends the “narrow road” in the face of recession fears

“TheThe two topics are related. It is natural for the finance ministers to express their position of caution and caution. Central banks are responsible for managing monetary policy, and today inflation is a central problem in Europe and Portugal as well.” said Fernando Medina, speaking on the second day of the informal meeting of EU finance ministers, within the framework of the Czech Presidency of the Council, in Prague.

After eurozone governments acknowledged on Friday that the war in Ukraine and the energy crisis had raised the risks of a recession, the Portuguese minister defended “the narrow path to be taken from a strategy to reduce inflation, when an important part of Domestic demand in the European Union, but it stems from energy prices.”

“It is understood that there is a need to work here, but it is clear that this work has to be balanced with what will happen from the point of view of the economic front,” he added.

For Fernando Medina, the euro countries must then follow “a path between these two sides, between what happens on the economic side and what happens with inflation”.

“If we don’t deal with inflation now, it will be difficult to tackle it later,” he warned.

Eurozone governments have acknowledged that the war in Ukraine has increased the risks of a recession, but have rejected that the economy is inevitably doomed and have vowed to take steps to combat and mitigate inflation.

“Risks have increased, but a recession is not inevitable,” Eurogroup President Paschal Donoghue and European Commissioner for the Economy Paolo Gentiloni told a news conference after the first day of the informal meeting of economy and finance ministers. Eurozone in Prague, which focused on how to respond to the war crisis in Ukraine.

Soaring energy prices, exacerbated by the invasion, pushed eurozone inflation to a record 9.1% in August and forced lower growth expectations in 19 countries, so much so that the European Central Bank predicted a recession in the event of a complete Russian gas cut.

In addition to fiscal and monetary policy, euro countries have already agreed that the solution to the energy crisis should include intervention in the market, something that energy ministers also discussed on Friday in Brussels, as they began designing measures to provide liquidity to energy companies or reduce the profits of energy-producing companies at a cost low.

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