ECB's Provopoulos - Economic recovery still fragile

ATHENS, Nov 12 (Reuters) - Global economic recovery is still fragile and should not be taken for granted, European Central Bank Governing Council member George Provopoulos said on Thursday, warning against a premature withdrawal of stimulus measures. "The recovery remains slow and fragile, as unemployment continues to climb, the cleansing of banks' balance sheets from problematic assets has not been completed and the economic outlook continues to be surrounded by considerable uncertainty," Provopoulos said in a speech in Athens. A timely exit strategy was necessary, he added. "But this will happen only when there is a sustainable improvement of credit conditions and the macroeconomic environment, in order to avert risks to macroeconomic and financial stability," he said. "The length and sustainability of this recovery can not be taken for granted," Provopoulos said in the speech, which was about comparing the current economic crisis with that of 1929. Speaking about the ECB's policy, Provopoulos said: "The basic characteristics and the time of application of the exit strategy will be mainly determined by the need, on the one hand to ensure price stability in the medium term, and on the other to progressively reduce the dependence of the financial and credit system from the extraordinary measures, as financial and credit conditions improve." Still, fiscal consolidation will be needed, as monetary and fiscal stimulus measures lead to large fiscal slippages and debt, Provopoulos warned. "The huge swelling of public debt in developed countries will make it necessary to start within the next two years with a fiscal stabilisation policy which will last several years," he said. On current trends, public debt in the euro zone will approach 100 percent of the bloc's gross domestic product by 2014, he warned. (Reporting by Harry Papachristou; Editing by Ron Askew) Keywords: ECB PROVOPOULOS/SPEECH ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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