ECB: Risks surrounding growth outlook ‘more balanced’

By Aysu Bicer

ANKARA (AA) - The coronavirus pandemic will continue to have an adverse impact on euro area's economic activity in the short term, yet risks surrounding the growth outlook have become “more balanced,” said the head of the European Central Bank (ECB) on Thursday.

"Improving global demand, also spurred by sizeable US fiscal stimulus, and the progress in vaccination campaigns constitute upside risks," Christine Lagarde said in a statement.

Echoing the bank's policy stance, Lagarde noted that the €1.85 trillion set aside in the Pandemic Emergency Purchase Programme may not have to be used in full if favorable financing conditions can be maintained.

She said further international efforts will be required to fight back the effects of the pandemic, to maintain a well-functioning international monetary system and to support a global economy that is fit for the future.

Noting that the ECB supports the crisis response measures taken by the IMF, Lagarde said the bank welcomed the recent progress made towards a general special drawing rights (SDR) allocation.

"It is a strong and important signal of constructive multilateral cooperation helping the global recovery."

An SDR is an international reserve asset formed by the IMF from a basket of currencies – including the US dollar, the Japanese yen, the Chinese yuan, the British pound, and the euro.

Last month, Kristalina Georgieva, the IMF chief, said a new $650 billion allocation of SDRs would add a substantial, direct liquidity boost to poor countries, without adding to debt burdens.