The Straits Times
Published on Dec 06, 2012

ECB depicts bleak 2013 after leaving rates on hold


FRANKFURT (REUTERS) - The euro zone economy is likely to shrink next year as it has in 2012, the European Central Bank predicted on Thursday, sharply downgrading its outlook after holding interest rates at a record low 0.75 per cent.

The bank's new staff projections put gross domestic product in a range of falling by 0.9 per cent to growing by just 0.3 per cent next year, suggesting contraction is far more likely than not. ECB President Mario Draghi said downside risks prevailed.

In September, the ECB's staff had pencilled in a significantly higher range of -0.4 to +1.4 per cent for the euro area economy.

"Economic weakness in the euro zone is expected to extend into next year," Mr Draghi told a news conference after the central bank's monthly policy meeting.