Munich (dpa/lby) - BayernLB sees the economy in the euro area entering a phase of stagflation feared by economists and politicians alike - rising prices with stagnating economic output. Inflation rates are high, but the economy is no longer growing, said BayernLB chief economist Jürgen Michels on Tuesday in Munich. The last noticeable growth was in the third quarter of 2021. "Since then we've been hovering around the zero mark, which will probably continue for much of this year."
The term "stagflation" dates back to the 1970s and describes the combination of high inflation and weak economic activity triggered by the oil price shocks of the time.
At the beginning of May, the President of the European Central Bank (ECB), Christine Lagarde, contradicted fears of stagflation. However, Michels was more pessimistic on this point. After the corona pandemic, the Ukraine war and the West's conflicts with China, the BayernLB chief economist sees a turning point in which it will be much more difficult for Europe and Germany to maintain prosperity or create new prosperity.