Eurozone Economy Is Improving, ECB Chief Says, but Outlook Is Muted – New York Times

SINTRA, Portugal — The eurozone economy is in better shape than it has been since the beginning of the financial crisis, but political leaders need to overhaul their chronically poorly-performing economies, the president of the European Central Bank said on Friday.

"The economic outlook for the euro area is brighter today than it has been for seven long years," the central bank's president, Mario Draghi, said at the institution's gathering of economists and central bankers at a golf resort in Sintra, Portugal — the European version of the annual conference for Federal Reserve officials in Jackson Hole, Wyo.

But he said governments needed to address impediments to investment and growth like bureaucracy, legal barriers to hiring and firing, and overregulation.

The economic recovery, attributed partly to central bank stimulus measures, created "near perfect conditions for governments to engage more systematically in the structural reforms that will anchor the return to growth," Mr. Draghi said.

Mr. Draghi reiterated that having a flexible, well-performing economy should be a condition for membership in the eurozone, "part of our common DNA."

It was hardly the first time that Mr. Draghi has harangued eurozone political leaders to do more to fix their underachieving economies. He noted wryly that he and other members of the European Central Bank's executive board had pleaded for structural overhauls in one-third of their speeches. Members of the Federal Reserve's board of governors spoke about such overhauls only 2 percent of the time, he said.

Elected officials, however, have often resisted changing laws and regulations that favor certain interest groups, such as taxi drivers or accountants, but act as a drag on the economy as a whole.

Despite Mr. Draghi's upbeat assessment of the economy, there is also concern at the European Central Bank, as well as among economists and entrepreneurs, that a modest upturn could fizzle if eurozone leaders do not improve conditions for businesses and address the chronically high unemployment. He displayed a slide showing how eurozone countries rank poorly in surveys of how easy it is to do business.

Even as growth picks up, there remain threats to the very existence of the 19-nation eurozone. Such concerns were very much on the minds of the economists and central bankers in attendance.

Stanley Fischer, vice chairman of the Federal Reserve, warned during a speech at the resort during dinner on Thursday of the continuing risk from the crisis in Greece or the possibility that Britain could choose to leave the European Union.

Mr. Fischer said it is "very likely" that the European Monetary Union, the basis of the euro, would survive. "But," he added, "in the longer run, E.M.U. will not survive unless it also brings prosperity to its members."