RECOVERY NOT CERTAIN, DRAGHI WARNS
RECOVERY NOT CERTAIN, DRAGHI WARNS
(ANSA) - Rome, October 29 - While the global economic free-fall appears to have stopped, it is not for certain that a long-lasting recovery has began, Bank of Italy Governor Mario Draghi said on Thursday.
In an address marking World Savings Day, Draghi explained that a real recovery needed to be ''based on factors other than special economic policy measures'' adopted to deal with the crisis.
Draghi, who is also chairman of the Group of 20's Financial Stability Board (FSB), observed that in regard to the Italian economy, ''the acute phase of the crisis is over and gross domestic product was back on the rise in the third quarter after declining for over a year''.
Nevertheless, he warned, while some factors did appear favorable, others remained critical including the slump in domestic consumer demand.
The employment picture also remained gloomy, he added, with a 3.3% year-on-year drop in people holding jobs in September, a trend expected to continue for the rest of the year.
After this past year's global financial crunch and subsequent economic downturn, Draghi observed, ''nothing will be the same again and all players on financial markets, starting with banks, should accept this fact''.
According to the FSB chairman, ''the market place should not forget that that the crisis was the consequence of its own imprudence''.
New market rules to ensure that a similar situation does not occur again, Draghi said, ''must be introduced gradually in order not to hinder the economic recovery''.
Looking at Italian banks, Draghi observed that ''our banking system weathered the crisis better than many others. But we must not let our guard down because the system remains very fragile''.
Evidence of this, the governor added, was the fact that ''the quality of credit continues to deteriorate sharply and the effects of the recession have already cut significantly into bank profits''.
In order to meet the challenges of the future, Draghi said, Italy ''urgently needs to get back on the road to reforms to create the conditions for a greater economic growth, which is the foundation of financial stability''.
''We need to tackle our economy's structural weaknesses in order to foster a lasting recovery, one which is not just based on exports,'' he added.
