(Reuters) - The euro area may struggle to recover from the economic crisis with entrenched high unemployment and weak investment hitting heavily indebted countries already suffering from disinflation, ECB Governing Council member Ignazio Visco said on Tuesday.
Visco, who is also governor of the Bank of Italy, said the euro area economy may return to pre-crisis levels late next year, but the impact on higher unemployment and lower investment is likely to last beyond the current cycle.
"This is particularly worrisome for countries with high public debts, whose sustainability requires a return to steady economic growth, and which may also suffer, as is presently the case in the euro area, from excessive disinflation," he said at a conference in Rome.
"And this is why structural reforms and accommodative monetary policy are so much in demand these days," he said.
Italy, with a public debt expected to be about 130 percent of gross domestic product this year, had its first brush with deflation since 1959 in August when consumer prices fell 0.2 percent year-on-year.
reuters.com
Visco, who is also governor of the Bank of Italy, said the euro area economy may return to pre-crisis levels late next year, but the impact on higher unemployment and lower investment is likely to last beyond the current cycle.
"This is particularly worrisome for countries with high public debts, whose sustainability requires a return to steady economic growth, and which may also suffer, as is presently the case in the euro area, from excessive disinflation," he said at a conference in Rome.
"And this is why structural reforms and accommodative monetary policy are so much in demand these days," he said.
Italy, with a public debt expected to be about 130 percent of gross domestic product this year, had its first brush with deflation since 1959 in August when consumer prices fell 0.2 percent year-on-year.
reuters.com
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