13 December 2018

EurActiv: ECB chief Draghi downgrades economic forecast as risks persist

“Uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility remain prominent,” Draghi told reporters following the ECB’s Governing Council meeting.

Against this backdrop, the central bank revised slightly downwards its two-year economic forecast. It now expects eurozone economy to grow 1.9% this year and 1.7% in 2019, compared with 2% and 1.8% projected in September.

Draghi described the current mood in the Frankfurt-based institution as “continuing confidence with increasing caution”.

Looking at the various risks, he noted that these factors “may change”. He noted the slight improvement in the global trade dispute, with less vulnerability seen in emerging markets.

Draghi confirmed that the ECB would conclude its bond-buying programme this month after almost four years, pumping €60 billion per month in the economy during most of this period.

But the ECB will continue with its monetary support as it will reinvest the stock of acquired assets.

This “continues to provide the necessary degree of monetary accommodation for the sustained convergence of inflation to our aim.”

In view of expected slower growth and persistent risks, he said “significant monetary policy stimulus is still needed” to reach the ‘below but close to 2%’ inflation target and maintain the European expansion.

Draghi pointed to “weaker than expected” economic indicators over the past months, reflecting “softer” external demand as a consequence of the trade tensions, but also some country and sector-specific factors. [...]

Full article on EurActiv

Press statement

Financial Times: Draghi launches defence of EU and euro against rising nationalism

Speaking in Italy at the weekend, ahead of the single currency’s 20th anniversary on January 1, the president of the European Central Bank said the introduction of the euro had been an “exceptional response” to centuries of dictatorship and misery.

“The fascination with illiberal prescriptions and regimes is spreading; we are seeing little steps back in history,” Mr Draghi told a forum in Pisa, insisting that was why the European project was even more important today.

“It is only by continuing to make progress, freeing up individual energies but also fostering social equity, that we will save it through our democracies, with a unity of purpose.”

Mr Draghi’s staunch defence of the EU comes as the bloc faces challenges from national interests that question the legitimacy of pan-European decision-making. [...]

Mr Draghi, who announced last week that the ECB would halt the expansion of its €2.6tn QE package at the end of this year, said last week that he could not condone the violence used by some of the so-called gilets jaunes protesters. But the ECB president also acknowledged that the gains of membership of the single currency area had not been evenly spread. “It’s clear that not everybody participated to the benefits of the common currency.”

On Saturday, however, he attacked Italy’s coalition government made up of the Five Star Movement and the League, for saying that the single currency had made Italians poorer. “Low growth in Italy is a phenomenon that dates back a very long time before the euro,” Mr Draghi said.

The years since the second world war had “confirmed the rationality” of more European — and global — integration”, he said.

“The challenges that have arisen have become ever more global in nature and need to be tackled together, not alone.” 

Full article on Financial Times (subscription required)

Mario Draghi speech: Europe and the euro 20 years on

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