European Central Bank President Mario Draghi says the eurozone economy remains on track for a slow recovery.
Speaking at a news conference in Paris after bank policymakers had left interest rates unchanged at their monthly meeting, Draghi reiterated the cost of borrowing will stay low for “an extended period of time” to aid that recovery.
He told reporters: “Real GDP growth in the second quarter was positive after six quarters of negative output growth. And confidence indicators up to September confirm the expected gradual improvement in economic activity from low levels.”
Inevitably, Draghi was asked about the shutdown of the US government as some in Europe expressed worries about its impact on the fragile recovery in the region.
The shutdown is a threat to the economies of France and other US trade partners, Finance Minister Pierre Moscovici said.
Draghi did not seem too perturbed, provided the shutdown does not drag on. He said: “The US budget shutdown is a risk if protracted. At the present time, the impression one has is that it will not be so. But essentially if it were to be protracted it’s certainly a risk for the US and the world recovery.”
Draghi called the eurozone economy weak, fragile and uneven. This week we learned the pace of growth in manufacturing in the region fell in September, though it did expand for the third-straight month.
Because of that weakness, the ECB is willing to use “all available instruments” to borrowing costs for businesses from rising and choking off a fledgling recovery.
He said the bank would even consider offering a third round of cheap, long-term loans to banks. The money injection would boost the flow of credit in the economy, hopefully helping growth.
The euro rose after his comments.