Growth in Europe remains fragile, says ECB chief Draghi

DAVOS: With economic growth remaining fragile, European countries cannot afford to relax their efforts towards implementing structural reforms, according to ECB chief Mario Draghi. Many countries in Europe are still grappling with economic woes making the region's recovery uneven.

Draghi, the President of European Central Bank, said that Europe is on the road to recovery but governments must remain committed to structural reforms. "The recovery is gradually taking place but the risks are to the downside... unemployment has stabilised but remains very high," he told the World Economic Forum (WEF) annual meet yesterday. Noting that growth remains fragile and uneven, he said recovery which started with exports is now moving to consumption.

Some economic data, such as confidence and industrial production, have been occasionally good and occasionally not so good, creating a situation similar to that in the US a year-and-a-half ago, he said.

Even while appreciating Greece, Portugal, Spain and Italy for implementing some structural reforms, Draghi said they cannot relax their efforts while other countries too must make progress on this front.

Fiscal consolidation must not be unravelled, he added. About European banking system, he said the situation is "dramatically better" that what it was a year ago. The upcoming stress tests would further improve confidence in the banking system by increasing transparency, he said. According to Draghi, the aim is to have one supervisor and one regulator for all banks in Europe in the future.

"... ECB's view is that there should be an accelerated timeline for breaking the link between banks and sovereigns," through the creation of a European fund, independent of national governments, to backstop banks in difficulty, he added.