European Central Bank chief sees ‘very gradual’ Eurozone recovery
WASHINGTON -- The Eurozone, stuck in its longest-ever recession, is headed for a “very gradual recovery” later this year driven by stimulative monetary policy and increased demand for exports, the head of the European Central Bank said Monday.
Central bank President Mario Draghi defended the agency’s unprecedented actions to boost economic growth, which have been criticized in Europe in the same way the Federal Reserve’s aggressive steps have been in the U.S.
“The economic situation in the euro area remains challenging but there are a few signs of a possible stabilization, and our baseline scenario continues to be one of a very gradual recovery starting in the latter part of this year,” Draghi said in a speech at the International Monetary Conference in Shanghai.
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“The drivers of such a gradual recovery are the highly accommodative monetary policy and export growth, caused by growing foreign demand,” he said.
An end to the recession this year would help the U.S. economy by increasing demand for its goods in Europe.
Unemployment in the 17-nation Eurozone hit a record high of 12.2% in April as the region’s recession continued.
In the first three months of this year, the economy of the single-currency zone contracted for the sixth-straight quarter, topping the five-quarter recession in 2008 and 2009.
Last month, the ECB lowered its key interest rate to a record-low 0.50%, and one policymaker has suggested the central bank could reduce the interest rate it pays on excess bank deposits to below zero.
The ECB also has launched a program to buy government bonds, which is being challenged in a German court.
On Monday, Draghi defended that program and other steps the central bank has taken to stimulate economic growth.
“The crisis has demonstrated the capacity and unwavering commitment of the European Central Bank to support the economy in its pursuit of price stability,” Draghi said.
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