THE EUROZONE’s economy may have stopped getting worse, European Central Bank (ECB) boss Mario Draghi announced yesterday, claiming that the situation appears to be stabilising.
However, he did warn that such an optimistic outlook may be at risk from the ongoing political wrangling over the sovereign debt crisis.
“Tentative signs of stabilisation of economic activity at low levels” are emerging, Draghi (pictured) told a press conference after meeting Gulf central bankers.
The ongoing government spending cuts across much of the Eurozone, combined with the promises of future fiscal discipline and reforms of inefficient labour markets mean the economy should be in “better shape” through 2012.
The ECB’s efforts have helped ease the credit crunch which was developing through the end of 2011, he said.
The Bank is “reasonably satisfied” with the impact of its three-year loan of almost half a trillion euros, which was credited with helping high-risk countries issue debt at – by the standards of recent months – relatively low yields.
However, serious worries remain.
“We see a softening business cycle in Europe with significant downside risk,” Draghi said, acknowledging the intense uncertainty around current economic forecasts.