The European Central Bank said the economic recovery is expected to proceed on domestic demand and investment but cautioned that the recovery is weighed down by the ongoing balance sheet adjustments.
"Domestic demand, in particular, continues to be supported by the ECB's monetary policy measures," the bank said in its economic bulletin published Thursday.
Their favorable impact on financing conditions and improvements in corporate profitability underpin investment. At the same time, accommodative monetary policy stance and employment gains together with low oil prices lift disposable income of households.
Nonetheless, the bank said the recovery is still dampened by the balance sheet adjustments in a number of sectors. The risks to the euro area growth outlook still remain tilted to the downside.
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