##minants of productivity shows that lower productivity growth in the euro area has been partly related to higher employment due to greater participation of lower - skilled labour. sustained wage moderation and some progress in labour market reforms aimed at increasing labour market participation appear to have partially shifted production towards a more intensive use of labour. there are also indications that the slower pace of productivity growth observed in the euro area since the mid - 1990s reflects an insufficient use of new productivity - enhancing technologies. while productivity growth has increased in sectors that produce information and communication technologies or provide related services, it has declined in many other areas of the economy. this points to structural rigidities in the euro area that prevent or hinder the fast and effective dissemination of new technologies and improved production processes across the economy. against this background, structural reforms that stimulate innovation, investment and productivity, and promote the use of new productivity - enhancing technologies are crucial. stimulating product market competition, facilitating restructuring and improving human capital through adequate educational systems and “ on - the - job ” training are likely to speed up productivity gains from the use of new technologies. we are now at your disposal for questions.

speech challenges for monetary policy remarks by luis de guindos, vice - president of the ecb, at the frankfurt euro finance summit frankfurt am main, 4 july 2022 having participated in the previous two summits, it is a great pleasure to speak with you again this year. in my remarks today, i will first discuss the economic outlook for the euro area. i will then turn to the ecb ’ s recent monetary policy decisions and look at why an even transmission of our monetary policy is vital to the achievement of our price stability mandate. the euro area economic outlook over the first half of this year, euro area inflation has continued to rise and has reached undesirably high levels. in june headline inflation rose to 8. 6 %, another record high, continuing to reflect surging energy and food prices, owing in part to russia ’ s unjustified invasion of ukraine. but price increases have not been limited to energy and food. in recent months we have seen inflationary pressures broaden and intensify across many goods and services. elevated inflation will remain with us for some time, declining to just above target only at the end of our projection horizon. we expect that moderating energy costs, the easing of supply disruptions related to the pandemic and the normalisation of monetary policy will be conducive to inflation returning to our 2 % target over the medium term. but the risks surrounding inflation are on the upside. economic activity is in turn affected by the war and its consequences. rising prices are reducing disposable incomes, while intensified supply disruptions and greater uncertainty are also weighing on growth, particularly in the manufacturing sector. at the same time, developments in the services sector are supporting growth, with the lifting of pandemic - related restrictions and signs of a buoyant summer tourism season boosting activity. these developments are bolstering incomes and consumption, helping an already strong labour market to withstand the economic impact of the war. our projections foresee growth above 2 % throughout the projection horizon. but the war and the risk of further disruption in the energy supply to the euro area continues to be a significant downside risk to growth. in fact, the downside scenario in our june projections reflects this risk and implies a contraction of activity in 2023, following weaker but positive growth in 2022. while we are still expecting positive growth rates throughout our projection horizon, in the coming months we will have to navigate this challenging combination of shocks which