FRANKFURT: The European Central Bank on late Thursday raised slightly its growth forecast for the euro area this year, but trimmed its forecast for inflation.
ECB president Mario Draghi told a news conference that the central bank is pencilling in economic growth of 1.2 percent in 2014, 1.5 percent in 2015, and 1.8 percent in 2016.
That represents a fractional upward revision of 0.1 percentage point for 2014, compared with the ECB’s previous projections published in December, Draghi said.
On the price front, inflation was now expected to average 1.0 percent in 2014—a slight cut from previous estimates, 1.3 percent in 2015, and 1.5 percent in 2016.
“Real gross domestic product growth is projected to remain moderate in 2014, gaining pace from 2015,” the ECB chief said.
“A gradual recovery in domestic and external demand is expected to be the driving factor behind the projected increase in activity,” he said.
External demand would benefit from the global recovery gradually gaining strength.
Domestic demand was expected to benefit from improving confidence, the accommodative monetary policy stance and falling oil prices, which should lift real disposable incomes.
“Domestic demand should also benefit from a less restrictive fiscal policy stance in the coming years and from gradually improving credit supply conditions,” the ECB said.