The eurozone economy is at risk of slipping into chaos, according to the European Central Bank (ECB) president Mario Draghi. This comes after German Chancellor Angela Merkel was forced to slash her country’s growth forecast following a shock downturn in economic figures. Business daily Handelsblatt reported that the German government was lowering its growth forecast for the current year from 1.8 percent to one percent.
There are growing fears that the current economic downturn could spiral out of control this year, as Europe’s biggest economic powers struggle to maintain growth.
Figures released last week showed Germany’s economy grew by 1.5% in 2018 – the slowest rate since 2013.
Leading German economists blamed the sharp slowdown on a weaker global economy, problems in the car industry and subdued business and investor confidence.
There had initially been fears that Germany would be hit with negative growth – putting the country on the brink of recession.
A survey released yesterday revealed that German business morale fell for the fifth consecutive month in January, signaling a downturn in Europe’s largest economy.
German business executives have become pessimistic about future growth for the first time since 2012.
Clemens Fuest, president of the Munich-based Ifo economic institute said: “Disquiet is growing among German businesses.
“The German economy is experiencing a downturn.”
European Central Bank (ECB) president Mario Draghi told reporters on Thursday that economic figures had been weaker than expected, and the risks to growth have increased.
Mr Draghi pointed to Germany’s economic shock as a major reason for the current eurozone fears.
He added that the ECB’s Governing Council was monitoring the risk of recession but considered its probability “low”.
However, the ECB chief also predicted that the eurozone would not suffer “extension disruption” from Brexit.