ECB Economic Bulletin: Inflation is likely to remain high for too long

At the beginning of 2023, global economic activity was stronger than expected

The global economy was supported by the recovery of the Chinese economy, as well as the stability of the US labor market

Trade remained relatively weak as the recovery in activity was concentrated in less trade-intensive demand components such as services.

Overall inflation in the world continues to decline, but core inflation remains at an elevated level.

Lower energy prices, elimination of supply problems and fiscal policy support for firms and households have contributed to the resilience of the eurozone economy.

Private domestic demand, especially consumption, is likely to remain weak.

Business and consumer confidence has been steadily recovering in recent months, but remains weaker than before Russia's war against Ukraine.

Household incomes are benefiting from the strength of the labor market, with the unemployment rate falling to a new historical low of 6.5% in March.

As the energy crisis weakens, governments should promptly and consistently scale back appropriate support measures to avoid strengthening medium-term inflationary pressures.

Fiscal policy should be focused on increasing the productivity of the eurozone economy and gradually reducing the high level of public debt.

Policies aimed at strengthening the eurozone's supply capacity, especially in the energy sector, can also help reduce price pressures in the medium term.