At his press conference today, ECB President Mario Draghi declared:
Later in 2013 economic activity should gradually recover. In particular, our accommodative monetary policy stance, together with significantly improved financial market confidence and reduced fragmentation, should work its way through to the economy, and global demand should strengthen.
Needless to say, Draghi hedged his bets several times in other remarks he made during the press conference. After all, just last month, the ECB slashed its 2013 economic outlook for the euro zone to a contraction of 0.3% from a growth of 0.5%. There have been plenty of grim statistics recently coming out of the 17-member euro zone. The unemployment rate rose in November to 11.8% (Fig. 1). Industrial production fell 0.3% during November and 3.6% the past three months (Fig. 2). Even Germany’s export-led economy succumbed to the weakness of its neighbors during the Q4-2012, when real GDP contracted by 0.5% based on a preliminary estimate from annual data.