Draghi Assures Eurozone Economic Upturn Still Solid

The European Central Bank’s top officials lined up to express cautious confidence in the euroarea economy after a series of reports pointing to a surprisingly weak start to the year, while reiterating that they’ll move only slowly toward the end of stimulus.

President Mario Draghi and three of his most-senior colleagues signaled that while inflation remains too low and a global trade spat poses a new threat, the region’s economic upturn is still solid. The comments come just over two weeks before the governing council meets to discuss how and when it might end its bond-buying program, Bloomberg reported.

“We expect the pace of economic expansion to remain strong in 2018,” Draghi said in the institution’s annual report, while chief economist Peter Praet later said he sees no reason to change the ECB’s economic outlook.

Vice-president Vitor Constancio, presenting the report to the European Parliament, said price pressures will rise gradually and officials must remain cautious not to “derail” those developments.

A spate of recent data for the euroland has pointed to growth leveling out, with gauges for economic activity and retail sales missing economist estimates and investor confidence slipping. The downward dynamic has been particularly pronounced in Germany, the region’s largest economy, where figures for exports and industrial production both saw a sharp drop in February.

Economists have so far written off much of the slowdown as being caused by temporary factors. Prior to the release of many of the recent data, the ECB in March raised its 2018 forecast for growth to 2.4%.

“In the first few months of this year we have seen a softening of a number of indicators, but they’re still fully in line with the good scenario that we have, so we don’t see reasons to change our assessment of our projections,” Peter Praet, ECB’s executive board member, said in Frankfurt.

“We have to be careful because downside risks have increased, but in a context where risks remain broadly balanced.”

Executive board member Benoit Coeure told France Info Radio that “we don’t have worries about eurozone growth” because the bloc is simply stabilizing after last year’s acceleration, though he also acknowledged that there is “not enough” inflation. He said the ECB will soon begin discussions about what to do with its asset buyback program, which is set to continue until at least September and top €2.5 trillion (S$4.1 trillion).