Eurozone Faces Supply Bottlenecks, Higher Inflation Amid 'Atypical' Recovery

MOSCOW, (Sputnik) - The euro area economy has been experiencing rapid growth as it is recovering from the pandemic-related crisis, but such an atypical rebound is already accompanied by the early appearance of supply bottlenecks and a higher rate of inflation, the European Central Bank (ECB) president said on Tuesday.

The ECB chief expects GDP in the euro area to have "the steepest recovery since 1975" and "reconnect with its pre-pandemic trend by 2023".

"After a highly unusual recession, the euro area is going through a highly atypical recovery. This atypical recovery is leading to rapid growth, but also to supply bottlenecks appearing unusually early in the economic cycle. It is also causing inflation to rebound quickly as the economy reopens," Christine Lagarde said in her speech at the ECB Forum on Central Banking.

At the same time, supply shortages, caused by global shipping and cargo handling issues, are holding back production, Lagarde said, mentioning that "exports of euro area goods would have been almost 7% higher in the first half of this year were it not for supply bottlenecks."

The executive added that the economic reopening is pushing up inflation, which collapsed last year due to the lockdowns and now "reached 3% in August and is expected to rise further over the coming months."

Lagrade urged the countries of the euro area to adopt "an accommodating monetary policy stance to exit the pandemic safely and bring inflation sustainably back to 2%."