TALLINN, June 8 (Xinhua) -- The euro area economic growth forecast was revised upwards and the risks surrounding the growth outlook are considered to be broadly balanced, the European Central Bank (ECB) president said here on Thursday.
"These projections foresee annual real GDP increasing by 1.9 percent in 2017, by 1.8 percent in 2018 and by 1.7 percent in 2019. Compared with the March 2017 ECB staff macroeconomic projections, the outlook for real GDP growth has been revised upwards over the projection horizon," ECB President Mario Draghi told a press conference after a governing council meeting.
On the economic analysis, Draghi said that euro area real GDP increased by 0.6 percent in the first quarter of 2017, compared to a 0.5 percent growth in the last quarter of 2016. Incoming data, notably survey results, continue to point to solid, broad-based growth in the period ahead.
"Our monetary policy measures have facilitated the deleveraging process and should continue to support domestic demand. In particular, the recovery in investment continues to benefit from very favorable financing conditions and improvements in corporate profitability," he noted.
"Employment gains, which are also benefiting from past labor market reforms, are supporting real disposable income and private consumption," Draghi added.
Moreover, the global recovery is increasingly supporting trade and euro area exports. However, economic growth prospects continue to be dampened by a sluggish pace of implementation of structural reforms, in particular in product markets, and by remaining balance sheet adjustment needs in a number of sectors, notwithstanding ongoing improvements, said the ECB president.
About the risks surrounding the euro area growth outlook, Draghi said that on the one hand, the current positive cyclical momentum increases the chances of a stronger than expected economic upswing. On the other hand, downside risks relating to predominantly global factors continue to exist.
Earlier, he also announced that the ECB decided to keep the key ECB interest rates unchanged, expecting them to remain at their present levels for an extended period of time, and well past the horizon of net asset purchases.
The June 2017 Eurosystem staff macroeconomic projections for the euro area also foresee annual headline inflation at 1.5 percent in 2017, 1.3 percent in 2018 and 1.6 percent in 2019. By comparison with the March 2017 ECB staff macroeconomic projections, the outlook for headline Harmonized Index Consumer Prices (HICP) inflation has been revised downwards, mainly reflecting lower oil prices, said Draghi.
The ECB monetary policy measures have continued to preserve the very favorable financing conditions that are necessary to secure a sustained convergence of inflation rates towards levels below, but close to, 2 percent over the medium term, according to the ECB president.
