On Friday, European Central Bank (ECB) Executive Benoit Coeure said that there is a risk that a euro zone recovery might be delayed a few quarters. He added that upon worst case scenario, the common currency area might have a Japanese style lost decade.
In the text of a speech to be given at Amundi World Investment Forum, Coeure said that the recovery would start later this year remained the baseline scenario. He added that growth risks are on the downside.
Benoit Coeure said that if the short term risks scenarios would push through, the full recovery would occur by some quarters. Further, Coeure said that a more worrisome possibility was that of a persistent slowdown where immediate action is necessary to ensure it does not materialize.
Japan experienced a decade of no to slow growth in the 1990s. Coeure pinpointed to the banking sector as the risk factor for a lost decade. He ended his statement by saying that banks have to be brought back to health otherwise they should close down.
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