European Central Bank council member Yves Mersch said the euro-area economy will remain weak for the rest of the year and gain strength only slowly in 2013.
“Economic indicators point to a lasting weakness of economic activity for the rest of 2012 in the context of increased uncertainty,” Luxembourg’s central bank, which Mersch heads, said in a quarterly report published today. “Beyond the short term, economic activity in the euro zone should pick up only very gradually in 2013.”
Europe’s sovereign debt crisis is slowing economic growth in the 17-member euro area. Gross domestic product fell 0.2 percent in the second quarter from the first. ECB President Mario Draghi last week announced an unlimited bond-purchase program to regain control of interest rates and fight speculation of a currency breakup.
“The spreads between yields at the heart of the monetary union have remained at high levels due to persisting concerns about the sovereign risks faced by some countries,” Luxembourg’s central bank said in its report. The easing of tensions has largely “remained on hold, with market operators waiting for the implementation of new monetary policy measures by the euro system,” the bank said.
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