ECB's Lagarde: Increasing signs that the global economy is fragmenting into competing blocs

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European Central Bank President Christine Lagarde looks on as she attends the European Parliament's Committee on Economic and Monetary Affairs, at the European Parliament, in Brussels, Belgium September 25, 2023.Â

Yves Herman | Reuters

European Central Bank President Christine Lagarde on Friday said that Europe is now at a critical juncture, with deglobalization, demographics and decarbonization looming on the horizon.

"There are increasing signs that the global economy is fragmenting into competing blocs," she said at the European Banking Congress, according to a transcript.

Focusing on Europe, she said that a continuous decline in the population of working age looks set to start as early as 2025, alongside climate disasters that are increasing every year.

Her answer to these shocks was that massive investment would be needed in a short space of time, requiring what she called a "generational effort."

"As new trade barriers appear, we will need to reassess supply chains and invest in new ones that are safer, more efficient and closer to home," Lagarde said.

"As our societies age, we will need to deploy new technologies so that we can produce greater output with fewer workers.Â Digitalization will help. And as our climate warms, we will need to advance the green transition without any further delays."