World Economy

Euro area growth 'misery' shared with US: Ex-ECB chief

Euro area growth totally insufficient: Trichet
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Euro area growth totally insufficient: Trichet

Lackluster growth in the euro area is just as miserable as that seen in the U.S., the former president of the European Central Bank (ECB), told CNBC 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 U.S. and real growth in the euro area and, to my great surprise, the euro area had growth of 1.6 percent over 12 months whereas in the U.S. it was 1.2 percent," Jean-Claude Trichet told CNBC on the sidelines of the Ambrosetti forum.

"The euro area is, of course, posting growth which is totally insufficient but we share that insufficiency with the U.S...so we shouldn't present growth in the euro areas 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 euro zone.



Eric Piermont | AFP | Getty Images

Data on Wednesday showed that the 19-country region remains stuck with stubbornly low inflation and high unemployment levels. Inflation remained at 0.2 percent in August, unchanged from a July figure while unemployment came in at 10.1 percent 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 euro zone, 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 euro zone'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 euro area 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 euro area."

Remarking on Italy's need to reform in order to promote growth and stability, Trichet said that it exemplified what the euro area needed to do.

"I am confident that Italy, because it is embarking on those structural reforms that are overdue, will surmount difficulties as well as, I must say, the euro area as a whole. We have more or less the same problems and embarking on structural reforms (to take) advantage of the potential we have which is not expressed properly at the moment."

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