joachim nagel : welcoming speech a€ “ lithuanian evening welcoming speech by dr joachim nagel, president of the deutsche bundesbank, at the lithuanian evening, frankfurt am main, 4 july 2023. * * * check against delivery 1 introduction ladies and gentlemen, dear lithuanian - german friends, since croatia adopted the euro at the beginning of this year, lithuania has already become only the second - youngest member of the euro area. before lithuania joined in 2015, the bank of lithuania and the bundesbank signed an agreement on the acquisition of euro banknotes. 132 million banknotes were brought to lithuania from the bundesbank's vaults. 1 maybe some people took this as a symbolical birthday present, though a hefty one, weighing 114 tonnes! when the euro changeover was successfully completed, yves mersch, then a member of the executive board of the ecb, said : it is not only an enormous logistical achievement, but it is also a significant milestone for lithuania, strengthening the ties between the country and its european partners, and highlights the continued attractiveness of the euro. 2 since then, the eurosystem central banks have been working hand in hand as an anchor for price stability in the euro area. through times of low inflation, and now, when fighting inflation that is far too high. together with your neighbours estonia and latvia, your country has been the hardest hit in the euro area. the baltic countries suffered inflation rates above 20 %, which was more than twice as high as the euro area average. inflation has fallen from these peaks and is expected to ease further. the latest figures for june are : 5. 5 % in the euro area, 8. 2 % in lithuania, 6. 8 % in germany. like a beetle plague destroying the harvest, inflation harms our prosperity. beetles are useful in nature. but they should not get out of hand. on the governing council, we are acting in unison to get a grip on inflation. we will do what is necessary to bring it back to 2 %. to ensure a timely return to price stability, we are working together constructively. we can all learn from each other not only in the field of monetary policy, but also in other areas of central banking. i noted with great interest, for instance, that the bank of lithuania recently received a global award for financial market development : for its fintech newcomer programme. 3 so on the governing council, we all benefit from each other's expertise.

from december assumes that the euro - area economy will grow by 1. 7 % this year and by 1. 6 % in each of the next two years. although the forecast is currently undergoing its scheduled revision by the ecb staff, i do not expect the previous picture to change very much. however, from my vantage point the cyclical downside risk has recently tended to diminish. the german economy, too, with capacity utilisation perceptibly higher than that of the euro area, remains in good shape. employment once again hit a new all - time high last year. thanks, above all, to healthy domestic demand, gross domestic product was up by 1. 8 % after adjustment for calendar effects. the economy looks set to remain on an upward trajectory this year and the next, with domestic demand again providing the primary impetus. the bundesbank ’ s economists expect calendar - adjusted growth to come to 1. 8 % in 2017 and to dip slightly in the years after that. however, this positive economic outlook should not blind us to the fact that the longer - run outlook for growth in germany is sub - par. what i am thinking of here, for example, is that, in the coming years, the number of persons going into retirement will surpass the number of young people 2 / 8 bis central bankers'speeches entering the job market. in isolation, this will cause weaker growth. that, too, is why the oecd is projecting that, until 2060, germany will grow more slowly than any other major industrial country. the robust upswing and rising capacity utilisation will also drive up price pressures. according to the december projection, the euro area will see inflation rise to an average of 1. 3 % this year, followed by 1. 5 % next year and 1. 7 % the year thereafter. to repeat : that was the december projection. since then, inflation has risen even more strongly than expected, recently hitting 1. 8 %. and for full - year 2017, the inflation forecast will probably be lifted perceptibly. in germany, where the effect relative to the december forecast is likely to amount to one - half percentage point, some have therefore already spoken of “ the return of inflation ". this increase in prices, however, is attributable mainly to higher oil prices – since the end of november, oil has become significantly more expensive. at the beginning of the past year, its price had been exceptionally low