Also, the calendar for further price liberalisation, which has an impact on inflationary developments, is often set by each government and is thus difficult for a central bank to predict. From an ECB perspective, financial sector reform is also of the utmost importance. The reasons for this are mainly twofold. First, sound financial sectors are key to delivering “stable money”. Weak financial systems tend to blur the monetary transmission mechanism and the capacity of monetary policy to influence inflation and growth outcomes, putting the maintenance of price stability and the credibility of the central bank at risk. Second, financial sector reform is needed because it ensures that structural reforms, particularly in the goods and labour markets, become fully effective. Indeed, despite recent structural reforms and positive growth, the catching-up of per capita income with the euro area has remained limited, and in many countries output growth remains below potential. Efficiently functioning financial markets are an important precondition for an efficient allocation of capital, thereby contributing to an economy's growth potential. In many ways, the prospect of EU accession has been instrumental in triggering reform in accession countries, and structural reforms have advanced far enough in these economies to achieve macroeconomic stability. However, there is much that remains to be done. I am confident that the policy-makers in the region will “hear and listen” and remain committed to continuing along the path of reform on which they have already embarked.
Nevertheless, a recovering tourism industry, decreasing unemployment, and EU funding payments all help to boost activity and limit, to some extent, output loss. More specifically the Euro area quarterly economic growth reached 0.8 percent in the second quarter, following a 0.7 percent rise in the first quarter. Even though these growth rates are below the rates expected before the start of the war, the 0.8%, growth is still the strongest performance in three quarters, prompted by the easing of Covid restrictions and the good summer tourism season in southern countries. The impact from war developments is expected to be shown in the data of the fourth quarter of 2022 and the first half of 2023. This outlook is reflected in the latest ECB projections for economic growth, which have been revised down markedly for the remainder of the current year and throughout 2023. The euro area economy is now expected to grow by 3.1 percent in 2022, 0.9 percent in 2023 and 1.9 percent in 2024, compared to the December 2021 projections of 4,2 percent, 2,9 percent and 1,6 percent respectively. Harmonized inflation rose to a high of 9.1 percent in August, up from 8.9 percent in July. For the period January-August as a whole, inflation stood at 7,6  1/6  BIS - Central bankers' speeches  percent.