Eurozone Recovery Expected in Mid-2013: Draghi
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European Central Bank President Mario Draghi said on Friday that the eurozone economy has not yet emerged from the crisis but expressed confidence that a recovery will “certainly begin in the second half of 2013.”
Speaking at an interview with French radio Europe 1, Draghi also defended the European Central Bank’s strategy to preserve the euro’s stability, referring to the “unconventional means” the Bank had earlier pledged to use.
European Central Bank President Mario Draghi said on Friday that the eurozone economy has not yet emerged from the crisis but expressed confidence that a recovery will “certainly begin in the second half of 2013.”
Speaking at an interview with French radio Europe 1, Draghi also defended the European Central Bank’s strategy to preserve the euro’s stability, referring to the “unconventional means” the Bank had earlier pledged to use.
In September, the ECB had vowed to do “whatever it takes” to rescue the eurozone and signalled that it could purchase an unlimited amount of government bonds from struggling eurozone economies albeit under strict conditions.
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While the ECB is not able to accept any losses on its estimated 40 billion euros holding of Greece debt, for example, as that would amount to illegal monetary financing, German magazine Spiegel reported in October that the ECB is prepared to forgo any profits on its Greek bonds.
When asked if Greece would remain a member of the euro zone, Draghi said “the answer is positive.”
Describing the current economic contraction in the eurozone as “inevitable”, Draghi said steps taken to address the region’s sovereign debt crisis should be seen as setting a sound foundation for structural reforms to take effect.
He said:
[quote] We have not yet emerged from the crisis. The recovery for most of the eurozone will certainly begin in the second half of 2013. It is true that budgetary consolidation entails a short-term contraction of economic activity, but this budgetary consolidation is inevitable. [/quote]
Draghi also urged eurozone governments to persist in the implementation of a banking union – a single supervisory body that will allow for the direct recapitalisation of eurozone banks – but analysts have warned that the process could take years given the different interests and priorities of the eurozone countries.
However, to achieve deeper integration, member states must accept ceding more sovereignty, Draghi added.
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