European Central Bank President Mario Draghi said on Friday that euro area recovery is gradually taking place and there is no threat of deflation in the region.
Speaking at the 44th World Economic Forum Annual Meeting in Davos, Switzerland, Draghi said,"The recovery is gradually taking place but the risks are to the downside."
The ECB's very accommodative monetary policy is being passed into the real economy, he said.
Growth remains weak, fragile and uneven despite booming stock markets and a shift in recovery from exports to consumption, the ECB chief noted. Unemployment has stabilized but remains very high, he added. He also sought a change in laws in many countries to tackle youth unemployment.
The central bank head reiterated that Eurozone inflation is likely to remain below 2 percent target for the next two years. While he does not foresee deflation in the currency bloc, he said risks could rise if very low inflation persists.
"We would use all the instruments that our mandate permits" to fight any deflation threat, Draghi said.
Stressing on the importance of structural reforms, Draghi asked Greece, Portugal, Spain and Italy not to relax their efforts and urged other core European economies to make progress. He also said that fiscal consolidation must be maintained and must be made pro-growth by cutting taxes and government spending, while increasing infrastructure investment.
Stating that the European banking scene is "dramatically better" than a year ago, the ECB president said the upcoming stress tests will further improve confidence in the banking system by increasing transparency.
"Shedding light on banks' balance sheets should help them raise capital," Draghi said. "And of course banks that should go, should go."
Regarding bank supervision, Draghi said the goal is to have one supervisor and one regulator for all banks in Europe. "The ECB's view is that there should be an accelerated timeline for breaking the link between banks and sovereigns," he said. The creation of a European fund, independent of national governments, to backstop banks in difficulty should achieve this, he added.
For comments and feedback contact: editorial@rttnews.com
Economic News
What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.
April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.