VIENNA (MNI) – The current economic slump is the euro area’s worst
problem and it might last longer than previously assumed, European
Central Bank Governing Council member Ewald Nowotny said Friday.
“The deterioration in the Eurozone’s economic activity and the
forecasts for 2013 have been dramatic,” Nowotny said, speaking at a
press conference in Vienna.
“The Eurozone, unfortunately, is the weak point of the world
economy,” he added. “I see the weak Eurozone economic performance as a
great problem.”
The euro area economy posted its second consecutive quarter of
contracting GDP in the third quarter of 2012, Eurostat reported on
Thursday. The downtrend accelerated in the first month of the fourth
quarter, but slowed somewhat in November, leading to the assumption
among many economists that the contraction would bottom out in the
fourth quarter.
But Nowotny, who heads the Austrian National Bank, made clear that
he does not take this for granted.
“Experience tells me that the bottoming out is often pushed back
further than expected. I will not rule out that this could also be the
case here,” he said.
However, he stressed that the sovereign debt crisis afflicting a
number of Southern European EMU states, and most notably Greece, has
peaked.
Helped by the announcement of the ECB’s OMT debt purchase program
and a strong pledge by the central bank and EU political leaders to
fight for the euro, sovereign debt spreads have come down sharply in
recent months, taking the worst pressure of the debt-plagued states.
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