SINTRA, Portugal—European governments must step up efforts to overhaul their economies, European Central Bank President Mario Draghi said Friday, calling on political leaders to use the recovery brought on by the ECB’s stimulus to reform labor markets and make economic flexibility “part of our common DNA.”
“Structural reforms that reverse the downward drift in potential growth are now vital for the euro area, which is why I believe, as the guardian of the currency, we have a legitimate interest in talking about them,” Mr. Draghi said in a speech to the ECB’s annual conference in Sintra, Portugal.
Gross domestic product in the 19-member eurozone expanded 1.6% at an annualized rate last quarter, or 0.4% on a quarterly basis. Although faster than rates seen in the U.S. and U.K., the euro bloc has struggled to recover from a pair of recessions since 2009. The ECB expects eurozone GDP to grow 1.5% this year followed by roughly 2% rates in 2016 and 2017.
Yet even this stepped-up growth is unlikely to make a big dent in the bloc’s unemployment rate, which was 11.3% in March, about twice the U.S. rate. ECB chief economist Peter Praet said in an interview published Tuesday that the region’s structural unemployment rate is nearly 10%, which he called a “political and social problem” for Europe.