Europe's recovery faces three risks – unemployment and a lack of productivity and structural reforms, according to the European Central Bank's President, Mario Draghi.
In a speech to be delivered to the Finnish Parliament later Thursday, Draghi concedes that the euro area economic outlook "is surrounded by a number of downside risks."
According to a transcript released ahead of the speech to Finnish lawmakers, Draghi will say that the euro zone's "recovery will likely be dampened by high unemployment, sizeable unutilized capacity, and the necessary balance sheet adjustments….Inflation in the euro zone remains very low (and) meanwhile, we are facing continuously sluggish money and credit dynamics."
"We have seen a weakening in the euro area's growth momentum over the summer Also, most recent forecasts by private and public sector institutions have been revised downwards. Our expectation for a moderate recovery in the next years still remains in place, reflecting our monetary policy measures, the ongoing improvements in financial conditions, and the progress made vis-à-vis structural reforms and fiscal consolidation," he said.
His comments come amid speculation as to whether the ECB will implement a U.S.-style quantitative easing program to stimulate the euro zone economy in the face of slowing growth, disinflation and low consumer confidence -- at a 9-month low in November.
The bank has already begun to purchase asset-backed securities in a bid to get euro zone banks lending again but it has so far held off buying government bonds, due to German reluctance to take on euro zone debt.