Europe News

Euro zone outlook brightest 'in seven long years': Draghi

European Central Bank President Mario Draghi told the world's central bankers that the economic outlook for the euro zone is looking "brighter today than it has done for seven long years."

Speaking at an ECB-ran conference on global central banking in Portugal, Draghi sounded a positive note on the single currency's future but warned that structural reforms were crucial.

"The economic outlook for the euro area is brighter today than it has been for seven long years. Monetary policy is working its way through the economy. Growth is picking up. And inflation expectations have recovered from their trough," he told an audience in Sintra, Portugal.

"This is by no means the end of our challenges," he added, however.

"A cyclical recovery alone does not solve all of Europe's problems. It does not eliminate the debt overhang that affects parts of the Union. It does not eliminate the high level of structural unemployment that haunts too many countries. And it does not eliminate the need for perfecting the institutional set-up of our monetary union."

European Central Bank President Mario Draghi
Ralph Orlowski | Reuters

The remarks come a day after Draghi struck a gloomy note on growth in the region, saying at a conference on unemployment in Portugal Thursday that "growth is too low everywhere" in the 19-country euro zone despite a modest recovery.

Read MoreECB controversy over speech that sank the euro

Despite the low level of growth, the euro zone economy is improving, having expanded 0.4 percent in the first quarterof 2015, data showed earlier this month, even outpacing the U.S.

Weighing on the euro zone are concerns for countries like Greece, France and Italy, where progress on agreeing to – let alone implementing -- structural reforms, has been slow.

Draghi reiterated the importance of structural reforms throughout Europe in order to increase long-term growth.

"Being in the early phases of a cyclical recovery is not a reason to postpone structural reforms; it is in fact an opportunity to accelerate them," he said, extolling the benefits of reforms.

Read MoreNew Greek currency would be 'rubbish': Citi's Buiter

"First, (structural reforms) lift the path of potential output," he told the audience, "and second, they make economies more resilient to economic shocks."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld