Lackluster growth in the eurozone is just as miserable as that seen in the US, the former president of the European Central Bank said on Friday, defending the central bank’s policies.
“I would like to underline something that is not something well-perceived. I compared over the last 12 months real growth in the US and real growth in the eurozone and, to my great surprise, the eurozone had growth of 1.6% over 12 months whereas in the US it was 1.2%,” Jean-Claude Trichet told CNBC on the sidelines of the Ambrosetti forum.
“The eurozone is, of course, posting growth which is totally insufficient but we share that insufficiency with the US ...so we shouldn’t present growth in the eurozone as totally miserable. We share this misery with the other advanced economies in the current period,” he added.
Trichet’s comments come as markets look ahead to the next monetary policy meeting of the ECB next week with investors questioning if and when the central bank will employ additional measures to boost inflation and growth in the eurozone.
Data on Wednesday showed that the 19-country region remains stuck with stubbornly low inflation and high unemployment levels. Inflation remained at 0.2% in August, unchanged from a July figure while unemployment came in at 10.1% in July, unchanged from June.
The data followed the ECB’s unleashing of a raft of monetary measures to stimulate spending and investment in the eurozone, including negative interest rates and a trillion-euro corporate and sovereign bond-buying program.
The ECB has come under fire for cutting its deposit rate further into negative territory this year, effectively charging lenders who park their cash at the central bank (in the hope that it would encourage them to lend rather than stockpile excess cash), at a time when the region’s banks are trying to recover from the eurozone’s financial crisis and cope with new ECB banking sector regulations.
Trichet defended the central bank’s track record, however, saying that it had done a “fantastic job” over a “very difficult time.” He reiterated previous comments from the current president, Mario Draghi, that structural reforms at a domestic level in the euroarea were needed in conjunction with central bank actions.
“Structural reforms are of the essence,” he said. “The central bank cannot be the only game in town and it is repeated in all press conferences by Mario that we have to rely on those structural reforms in the entire eurozone.”
