Draghi says Euro area economic recovery "gaining momentum"

 
Jessica Morris
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Draghi is optimistic about the Euro area (Source: Getty)

European Central Bank (ECB) president Mario Draghi issued a bright outlook for the Eurozone economy, saying that it would benefit from low oil prices, a hefty stimulus package and favourable exchange rate movements.

"The basis for the economic recovery in the euro area has clearly strengthened," he said in a speech to the European Parliament.

"This is due to in particular the fall in oil prices, the gradual firming of external demand, easy financing conditions driven by our accomodative monetary policy, and the depreciation of the euro."

The Eurozone economy is expected to benefit from low oil prices, which fell as low as $45 per barrel in January, down from $106 per barrel in June. And looser monetary policy, in the form of the European Central Bank's €1.1 trillion (£800bn) debt-buying programme, is expected to provide further relief to the ailing region.

Additionally the euro, which fell to a seven-year low against the pound earlier this month, will help the single currency area's exporters by making their products more competitive.

Draghi also rebutted accusations that the European Central Bank's refusal to accept Greek government bonds as collateral meant it was effectively blackmailing the debt-ladden country.

"The European Central Bank has €104 billion of exposure to Greece. This is equal to 65 percent of Greek GDP, which is the highest exposure in the euro zone... so what sort of blackmail is this."

However he said Frankfurt would restore the waiver allowing it to accept Greek government bonds as collateral, but only when it was confident that the ongoing bailout negotiations would produce a positive outcome.

"There will be time when will we be able to reinstate the waiver, we'll be able to do QE to Greece, but several conditions have to be satisfied and they are not there yet. And we are confident they will be, as this process of policy dialogue is being reconstructed."

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