Under this scenario real GDP grows by only 1.3% in 2022, contracts by 1.7% in 2023 and, despite recovering in 2024 when it grows by 3%, remains significantly below the baseline level throughout the projection horizon. The inflationary episode Since mid-2021 we have witnessed a global inflationary episode that has proved more persistent than initially expected. This inflation has intensified in recent months as a result of the war in Ukraine, and has spread to numerous components of the consumption basket. In June euro area inflation rose again, reaching 8.6%. This is the highest figure for the euro area overall since the launch of the euro and up from 1.9% just one year earlier. The energy component remains the main factor behind this increase. However, food inflation also continued to rise, standing at 8.9% in June, partly reflecting the importance of Ukraine and Russia as agricultural goods producers. The persistence of industrial supply chain bottlenecks and the recovery in demand, particularly in the services sector, are also contributing to the current high inflation rates. Further, the inflationary pressures are spreading to a growing number of sectors, partly due to the indirect impact of the high energy costs across the economy. In consequence, most measures of underlying inflation have continued to rise. The increase in inflationary pressures also owes to the depreciation of the euro exchange rate.
These include improvements in service delivery by the public sector, having a stable and sustainable tax system, maintaining stability in the exchange rate, preserving political stability, consistency in government policy, and continued investment in infrastructure development. Other areas highlighted include addressing high lending rates, increased efforts in the fight against corruption and reducing bureaucratic processes. Further, respondents were of the view that government needs to take appropriate measures to enhance private sector involvement in decision-making and streamlining licensing requirements. In closing, I wish to thank you all for attending this virtual meeting and hope that you will use the occasion to explore the survey findings and recommend appropriate measures to contribute to the enhancement of the business environment. It is now my singular honour and privilege to officially open the workshop and wish you all fruitful deliberations. I thank you for your kind attention. God bless you. 2/3  BIS central bankers' speeches  3/3  BIS central bankers' speeches