Economy
Christine Lagarde: French steering ECB through COVID-19, energy shocks
Christine Lagarde’s decision to leave the role of the president of the European Central Bank (ECB) months before the end of the planned term would conclude an eventful seven years at an institution she was never expected to lead.
The former French finance minister and head of the International Monetary Fund (IMF) arrived in Frankfurt in 2019 as the first ECB chief with no formal economics training or central banking experience – prompting some market participants to label her a “credibility risk.”
In fact, she knew so little about the institution that Lagarde, 70, later said she had accepted the job thinking the presidency was a five-year mandate, rather than eight.
Yet after a tenure dominated by a COVID-19 pandemic, two energy shocks and the worst inflation spike in the eurozone’s history, Lagarde leaves with a record that defied the sceptics.
“Her seven years at the ECB have been, on the whole, pretty good,” said Willem Buiter, an economist and former Bank of England (BoE) official, noting that the ECB managed to bring inflation back down faster than peers in Britain and the U.S.
Her exit, however, threatens to be as political as her arrival.
By walking away before her eight-year term ends, Lagarde gives European Union leaders a chance to pick her successor before a French election next spring that opinion polls suggest far-right candidate Marine Le Pen will win, replacing President Emmanuel Macron.
For an institution that fiercely guards its independence from political meddling, the timing has drawn sharp criticism from central bank watchers.
“This is debasing the institution and just following the purely political calculus of the French president,” said Paul De Grauwe, a professor at the London School of Economics.
Lagarde and Macron have not addressed such criticism directly. Lagarde has said she would not be a candidate for the French presidency but would advocate for pro-European values in her home country “in whichever capacity” she deemed most efficient.
‘Better with butter’
Throughout her career, Lagarde has stood apart from more technocratic colleagues through a mix of charm, consensus-building and folksy pragmatism.
Favoring plain-speaking homilies over dense economic theory, the then-IMF chief famously declared that “everything is better with butter” when discussing growth and told governments to “fix the roof while the sun is shining.”
Unorthodoxy was a hallmark of Lagarde’s career, and the subject of her upcoming autobiography “Lady First.”
A former corporate lawyer who spent years in Chicago, she entered French politics in 2005 as an outsider.
Early missteps earned her the domestic moniker “Madame Lagaffe,” but she soon became one of then-President Nicolas Sarkozy’s sharpest operators, steering French banks through the 2008 crash.
She led the IMF through Europe’s debt crisis, navigating a messy Greek rescue that imposed harsh austerity, and sparked outrage in Athens when she bluntly urged suffering citizens to “pay their taxes.”
Her appetite for high-stakes bets showed again in 2018 with a record $57-billion lifeline for Argentina to back then-President Mauricio Macri. The gamble unravelled, failing to halt a currency collapse or avert a deep recession, and left the IMF bound to its most troubled debtor.
The spreads crisis and the tribal clique
Her occasional unfamiliarity with the nuances of central banking still peeked through.
In March 2020, as the pandemic rattled sovereign debt markets, Lagarde told a press conference the ECB was “not here to close spreads” between Italian and German borrowing costs.
The comment triggered an immediate selloff in bond markets and forced her to swiftly walk it back.
Under Lagarde’s watch, the ECB swiftly rolled out emergency bond-buying that stabilised markets as COVID-19 spread.
It launched its fastest series of interest-rate hikes to bring inflation under control following Russia’s 2022 invasion of Ukraine, although it later acknowledged it had been slow to recognise the full impact of spiking energy prices.
As ECB president, she once described economists as a “tribal clique,” a provocative jab at the profession’s establishment, though she later softened the blow by saying she hoped to join the tribe.
A ‘more political’ ECB president
Lagarde also used her political skills to repair rifts.
Unlike her predecessor Mario Draghi, whose top-down style embittered some hawkish northern European peers, she worked to build consensus among the euro zone’s 21 national central bank chiefs.
Her willingness to wade into politics remained evident: in January, Lagarde walked out of a World Economic Forum (WEF) dinner in Davos during a speech by U.S. Commerce Secretary Howard Lutnick that criticized Europe, an episode that underscored fraught trans-Atlantic relations.
Whoever succeeds her when she leaves the ECB on Feb. 7 will face fresh challenges, including strains in French bond markets ahead of next year’s election and a Middle East conflict that threatens a new bout of inflation.
Ultimately, Lagarde’s legacy may be a paradox: an outsider who showed that political diplomacy could steer a central bank through historic shocks, but whose early departure served as a final reminder of her political instincts.
“She was put there for a reason: being more political than her predecessor and, on that mission, I think she largely succeeded,” Frederik Ducrozet, head of strategy and macro research at Pictet Wealth Management, said.
Türkiye aims to raise the combined share of high- and medium-high-technology sectors in its manufacturing industry exports to 48.5% next year and increase total manufacturing exports to $276 billion (TL 13.7 trillion), according to a recent report citing data from the 2027 Presidential Annual Program.
The share of high-technology industries in manufacturing exports, which is expected to stand at 4% this year, is projected to rise to 5.5% next year. The share of medium-high-tech industries is also targeted to increase from 40% to 43%, the data compiled by Anadolu Agency (AA) suggested.
Thus, the combined share of the two technology groups is planned to reach 48.5%, up 4.5 percentage points from the estimated 44% level for this year.
To achieve this, the focus will be placed on investments, financing and R&D activities.
Manufacturing industry exports are projected to increase to $276 billion next year from an expected $266.2 billion this year. The target represents an increase of $9.8 billion in exports.
The manufacturing industry’s share of gross domestic product (GDP) at current prices is also targeted to thus rise from 15.5% to 15.9%.
Weight of medium-high-tech sectors
An examination of the structure of the manufacturing industry by technology intensity, as outlined in the program, highlights the significant weight of high- and medium-high-technology sectors in production and value added.
High-technology sectors account for 0.8% of businesses in the manufacturing industry, 2.9% of employees, 3.6% of production value and 6% of value added.
At the same time, medium-high-technology sectors held a much larger share, accounting for about 12.6% of the number of businesses and 20.5% of employees.
These sectors make up 27.5% of production value and 29.4% of value added.
The weight of these sectors in the technological composition of exports is also increasing. The combined share of high- and medium-high-technology sectors in total manufacturing exports increased from 36.4% in 2021 to 43.4% in 2025.
Support of tech transformation
Moreover, as part of efforts to support technological transformation in production through financing, the share of medium-high- and high-technology sectors in total loans is targeted to increase to 7.6% next year from an estimated 6.9% this year.
The share of high- and medium-high-technology exports in the export credit agency, Türk Eximbank’s loan volume is also projected to rise from 45% to 45.3%.
Similarly, the share of the manufacturing industry in KOSGEB support programs is planned to reach 90% in 2027.
Efforts are also to be carried out in microelectronics, semiconductors, quantum technologies and next-generation communications to develop high-technology production capacity.
The share of priority sectors in the manufacturing industry exports is planned to increase to 43.5% in 2027 from an estimated 40.1% this year.
Automotive exports target at $45.5 billion
In line with this, automotive industry exports – which is the leading group of Turkish exports – are targeted to rise to $45.5 billion next year from an expected $41.6 billion this year.
The sector’s share of manufacturing exports is also projected to increase from 15.6% to 16.5%.
Exports of electrical equipment are also targeted to rise to $22.8 billion from $20.9 billion, while machinery exports are expected to increase to $19.8 billion from $19.2 billion.
In the electronics sector, exports are targeted to increase to $4.5 billion from $4 billion.
The U.S. economy expanded at a healthy 3.4% in the third quarter of 2026, the Commerce Department said Thursday, beating market expectations and providing a slight boost to President Donald Trump ahead of midterm elections next week and concerns over higher fuel prices.
“The contributors to the increase in real GDP (gross domestic product) in the third quarter were increases in investment, consumer spending, and government spending that were partly offset by a decrease in exports,” the department’s Bureau of Economic Analysis (BEA) said in a statement.
Thursday’s data was an advance estimate released by the BEA, with two further estimates due in the coming weeks that could see the number revised.
The BEA said the acceleration in GDP growth was driven by an increase in investment and an upturn in government spending, which were partially offset by a decrease in exports.
Imports, which are a subtraction in the formula for GDP, also increased more in the third quarter than the previous one.
Trump’s Republican Party faces a stiff test from the Democratic Party for control of Congress in polls next Tuesday, with the president’s handling of the economy a key issue for voters.
Trump’s war on Iran has sent global energy prices skyrocketing due to Tehran’s retaliatory action, with U.S. consumers paying an average of 42% more at the pump for regular gasoline, according to data from the AAA motor club.
His wide-ranging tariff policies have also upended global trade and fueled inflation.
On Thursday, new data showed the preferred gauge for inflation of the Federal Reserve (Fed) rose by 3.6% year-over-year in September, an increase from the previous month.
The Fed prefers to use the Personal Consumption Expenditures (PCE) price index when gauging inflation, as it takes into account a broader range of household expenditures than Consumer Price Index (CPI) inflation.
On Wednesday, the U.S. central bank voted to keep interest rates steady, citing the need for more data to gauge how best to battle the surging inflation.
Chair Kevin Warsh reiterated the Fed’s commitment to its long-term 2% target for PCE inflation, which it has not achieved for more than five years.
He termed current inflation levels “too high,” but cautioned against moving too quickly, saying the Fed had seen some tightening of financial conditions in response to the Fed raising interest rates in September, its first hike in three years.
The European Central Bank (ECB) held its benchmark interest rate unchanged at 2.5%, as expected, while warning that higher borrowing costs could hold back economic growth.
“Financing conditions have tightened since the Governing Council’s last meeting, which is likely to weigh on inflation and growth,” the central bank for the 21-nation eurozone said in a statement.
Shortly before announcing its interest rate decision, the ECB said its president, Christine Lagarde, would step down on Feb. 7, 2027, nearly nine months before her eight-year term was due to end in late October.
The sharp rise in energy prices following the outbreak of war in Iran has pushed up consumer prices across the eurozone, strengthening the case for what would have been the ECB’s third interest rate increase this year.
Eurozone inflation climbed to 3.8% in September, its highest level in three years, driven largely by rising fuel prices.
The rate is now well above the ECB’s medium-term inflation target of 2%.
However, higher borrowing costs can also discourage investment and weigh on economic growth.
Türkiye’s annualized goods and services exports have reached a new high of $409.1 billion as of September, Trade Minister Ömer Bolat said on Thursday, marking Republic Day.
Bolat, in a written statement issued by his ministry, said that Türkiye’s economy and foreign trade had undergone a profound transformation over the past 20 years, underscoring the surge in exports from the early days of the republic to the present day.
“As of September, we estimate that our annualized exports of goods and services, including our forecast for services exports, reached $409.1 billion, the highest level in the history of our republic,” he said.
“This achievement is the result of the determination of our producers, the efforts of our exporters, the courage of our entrepreneurs and the unity of our nation,” he added, also suggesting that it represents the quality, competitiveness and appeal of Turkish goods and services.
Moreover, he pointed out that as the nation marks the 103rd anniversary of the republic, the authorities “continue to move toward a stronger and more prosperous future with the vision of ‘A Türkiye that produces, exports and grows.'”
Bolat noted that Türkiye’s economy, which was heavily dependent on agricultural products in its export structure in 1923, had developed a broad, value-added export portfolio spanning sectors from automotive and household appliances to the defense industry and software.
“Our goods exports, which amounted to just $50 million in 1923, rose to $2.9 billion in 1980 and $36.1 billion in 2002. As of September, our annualized goods exports reached $283.7 billion, setting a new record,” Bolat noted.
He also stated that Türkiye’s share of global goods exports averaged 0.38% between 1980 and 2000, rising to 0.55% in 2002 and 1.04% in 2025.
‘Dynamic export economy’
“In the early years of our republic, exports reached only 24 countries and covered 30 product chapters. Between January and September this year, they extended to 223 countries and customs territories, covering all product chapters and approximately 13,000 different products,” he further said.
“Türkiye now has a dynamic export economy with strong competitiveness, delivering its products to every corner of the world,” he added.
Recalling figures from the past, Bolat also mentioned that in 1973 it took a full year to achieve $1 billion in exports, while today, daily exports sometimes exceed $2 billion in volume.
“This extraordinary progress is the clearest indication of the enormous increase in Türkiye’s production capacity, the confidence and competitiveness our exporters have gained in global markets, and the economic maturity we have achieved as we enter the second century of our republic,” the minister said.
Similarly, he stressed that Türkiye had become not merely a producer but also a major trading and exporting power capable of delivering its products to the world. Despite challenges in the global trade environment, he said, Türkiye had maintained its economic resilience and reached record export levels in numerous markets.
Bolat also said exports to the EU countries had increased from $11.3 billion in 1996 to an annualized $118.7 billion as of September, driven by the momentum generated by the customs union.
‘Reliable player’
He also reiterated Türkiye’s transformation from an agriculture-oriented economy into a strong manufacturing and industrial exporter focused on high-tech production.
“Today, Türkiye has become one of the reliable players in global trade, with a comprehensive value chain extending from production and exports to technology and logistics,” he said.
He also informed that the share of medium-high- and high-technology products in total manufacturing industry exports, which stood at 30.4% in 2002, rose to 43.5% in 2025 and reached an annualized 44.1% as of September 2026.
“This major achievement over the past 24 years has been accompanied by uninterrupted growth in our exports of medium-high- and high-technology products,” he maintained.
He also provided data on the growth performance of the Turkish economy, noting that Türkiye rose from the world’s 21st-largest economy in terms of nominal gross domestic product (GDP) in 2002 to the 16th-largest in 2025.
“In terms of GDP calculated using purchasing power parity (PPP), it advanced from 16th place globally in 2002 to 11th place in 2025,” he added.
He also pledged to continue efforts to strengthen the country’s position in the global economy.
European Central Bank (ECB) chief Christine Lagarde said on Thursday she would step down from the role early in February next year, ending months of speculation about her future at a complex juncture for Europe and the ECB.
Lagarde will step down on Feb. 7, giving current European Union leaders time to pick a successor well before a French presidential election that polls show far-right candidate Marine Le Pen is favourite to win.
“European Central Bank President Christine Lagarde today informed the Governing Council and the President of the European Council António Costa that she will step down from her position on 7 February 2027,” the ECB said in a press release.
The former central bank governors of the Netherlands and Spain, Klaas Knot and Pablo Hernandez de Cos, are seen as frontrunners to replace Lagarde.
Lagarde’s term was scheduled to run until the end of October 2027 but speculation about an early departure had been mounting for months, with the World Economic Forum (WEF) seen as a likely destination.
The move comes as the ECB is in the middle of a rate-hiking cycle, seeking to prevent an oil-price shock linked to the Iran war from feeding into other prices and wages.
But it must also contend with a surge in government bond yields, especially in debt-laden France, that has pushed up borrowing costs for households and businesses and which Lagarde has said will curb growth and inflation.
Caught between persistent inflation fuelled by a renewed surge in energy costs and deteriorating financing conditions, the ECB is widely expected to keep its deposit rate at 2.5% on Thursday while signalling that another increase, potentially as soon as December, remains likely.
The U.S. war with Iran has cost American taxpayers an estimated $47.1 billion, according to new Pentagon figures submitted to Congress, as the conflict’s financial toll fuels debate ahead of the midterm elections and President Donald Trump signals that further military action remains possible.
The figure from U.S. Central Command, which oversees operations in the Middle East, is as of Oct. 16 and offers the most up-to-date cost for the conflict since it was launched in late February by the United States and Israel. The latest price tag, obtained by The Associated Press this week, shows a $3.5 billion bump in U.S. spending since early September, when that figure stood at about $43.6 billion.
The growing cost of the unpopular war and its economic ripple effects on energy prices could hurt Republicans in next week’s midterm elections. Voters on Tuesday will decide which political party controls Congress during Trump’s last two years in office.
The Republican president has said new strikes on Iran are an option after the midterms and is sending more military resources to the Middle East, despite initially promising Americans a military campaign that would last only a matter of weeks. As the war’s costs in lives, tax dollars and economic impact grow, most voters say they want Congress to prioritize ending the conflict, according to a recent AP-NORC poll.
The expense of the conflict and military spending in general are already a contentious issue on Capitol Hill, where the Trump administration is pushing for the passage of a historic $1.5 trillion military budget proposal. The White House is also asking lawmakers to approve a $95 billion package that would help fund the Iran war and other priorities.
Wednesday marks eight months of the war, which Democrats have been trying to end through legislation that has failed to pass the Republican-controlled Congress.
“Trump and his ego led us into this war with no plan, no authority, and no exit strategy,” Senate Minority Leader Chuck Schumer of New York said in a news release. “Senate Democrats will continue to do everything in our power to end this disaster of a war and stop the costs, chaos, and corruption seeping from the White House.”
In the latest estimate, the bulk of the war’s costs are for replacing munitions, at about $29 billion. The advanced weapons most in demand and whose stockpiles have been drawn down are defensive missile interceptors, such as those launched by the Army’s Patriot and THAAD systems, with a single Patriot interceptor costing millions of dollars.
The Pentagon says about $11.9 billion is related to costs of operations, while an additional $6 billion is tied to equipment losses. The Air Force’s costs are now $7.6 billion, and the Army’s are more than $2 billion. The Navy’s costs were listed at $1.45 billion, which is a significant drop from the $2.2 billion listed in early September.
When asked why the Navy’s cost estimates decreased over the roughly six-week period, both the Navy and U.S. Central Command referred the questions to the Pentagon, which did not immediately respond to emails requesting comment on the new cost estimates.
The latest estimate does not include damage to U.S. bases in the Middle East, which the Islamic Republic has attacked with ballistic missiles and drones. A report from the Pentagon inspector general released last month said Iranian strikes have damaged and destroyed hundreds of buildings and other structures at U.S. bases in Kuwait, Bahrain, Qatar, the United Arab Emirates, Saudi Arabia, Iraq, Oman and Jordan.
The Pentagon’s official tally lists 21 service members killed and 865 wounded in the conflict. That count includes troops who died in medical events and other situations that do not have a direct connection to the conflict, with 18 service members having been killed from Iranian strikes, combat aircraft crashes or the disposal of Iranian drones.
While Trump has mused repeatedly about whether to make a deal with Iran or “finish them off,” a third aircraft carrier and thousands of additional troops are making their way to the region. The Trump administration also has reduced staffing at some U.S. Embassies after receiving intelligence that Iran has stepped up efforts to target American personnel.
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