Euro area economic recovery is continuing, but remains very weak, warranting careful nurturing, European Central Bank Executive Board Member Jorg Asmussen said on Tuesday.
"The turning point in economic activity that we saw earlier in the year has not reversed," Asmussen said in a speech in Stockholm.
"Hard and soft data seem to suggest that the shoots of a recovery are there, yet they are still very green and need to be nurtured carefully."
Earlier today, the European Commission forecast 0.4 percent contraction for Eurozone this year. The economy of 18 countries following the euro is expected to grow 1.1 percent next year.
"The recovery is indeed weak, fragile, and uneven," Asmussen said. "We are basically running on one engine - net exports; the other engine - domestic demand - is sputtering but has not yet really taken off."
The European Central Bank is set to announce its latest interest rate decision on Thursday. Economists expect the bank to maintain status quo for now, even as low inflation and record high unemployment have fueled market speculation of a rate cut.
Asmussen said high unemployment and financial fragmentation both remain a chief concern. The unemployment rate, currently at around 12 percent, remains unacceptably high, he added, while pointing out that market sentiment remains fragile.
Further, the ECB policymaker said the banking union should be about strengthening the internal market, rather than fragmenting it.
Regarding the strengthening of the euro area banks, Asmussen said private-sector money should be first in line to reinforce the banking sector. "Public money should only be used when private solutions are not available or have been exhausted," he added.
"Whilst it is not yet clear whether these public backstops will need to be tapped, it is essential to have them in place.'
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