ECB's Draghi: Rising productivity vital for growth
President of the European Central Bank (ECB) Mario Draghi urged fiscal policymakers in the Eurozone to develop measures to lift productivity, encourage business innovation and liberalize labor markets. Without such reforms, the single currency area would remain stuck with low economic growth, the central banker insisted during his speech in Madrid on Wednesday.
Draghi noted that productivity gains in the Eurozone, as measured by workers' output per hour, have been lagging compared to those in the United States following the financial crisis, as growth declined from 2% to 0.5% in recent years. Boosting productivity, he argued, is "vital" to raising growth, improving living standards and alleviating the burden on government public finances. Draghi said low productivity growth mainly comes due to non-manufacturing companies' inability to absorb technological changes and improve efficiency amid already weak competition in many sectors.
The rate-setter said policymakers at the ECB, who are scheduled to meet next week, are taking steps to ensure low interest rates don't become a permanent feature of the Eurozone economy, but that governments have to play their part.