Draghi: Eurozone recovery faces 'downside risks'

European Central Bank leaves key rate at 0.75 percent despite doubts about recovery

Associated Press

FRANKFURT, Germany (AP) -- European Central Bank head Mario Draghi is sticking to his forecast that the recession-bound euro area economy will recover later this year — but cautions the hoped-for rebound could be delayed.

Draghi predicted a "gradual recovery" for the 17 European Union countries that use the euro in the second half — but added that his outlook was "subject to downside risk."

The ECB projects the 17-country eurozone will shrink 0.5 percent this year. Weak economic indicators have suggested that its economy shrank in the first quarter of the year for the sixth straight quarter in a row.

Draghi made his comment after the ECB left its benchmark interest rate unchanged at a record low 0.75 percent. Bank officials have said that an additional cut might not offer much additional stimulus.