ECB lowers eurozone growth outlook for 2012, 2013

The European Central Bank (ECB) has lowered its projection for economic growth in the eurozone for 2012 and 2013, while at the same time, raising its forecast for inflation in the 17-nation bloc.

The ECB said on Thursday that it expected the bloc’s economy to tumble by 0.4 percent this year and then grow by 0.5 percent in the next, down from its previous forecast in June of minus 0.1 percent for 2012 and plus 1.0 percent for 2013, AFP reported.

The bank also predicted that inflation would rise by 2.5 percent in 2012, up from a June forecast of 2.4 percent and by 1.9 percent in 2013, up from a 1.6 percent forecast, issued three months ago.

Also on Thursday, the President of the ECB, Mario Draghi unveiled a new program to help eurozone’s more cash-strapped states, noting that such scheme would come with “strict and effective” conditions for countries that take it.

The ECB chief told a news conference in Frankfurt that it would launch a scheme of “Outright Monetary Transactions or OMTs in secondary markets for sovereign bonds in the euro area.”

“We need to be in the position to safeguard the monetary policy transmission mechanism in all countries of the euro area,” Draghi added.

Various eurozone member states have been struggling with serious economic stagnation since the bloc’s financial crisis began roughly five years ago.

The worsening debt crisis has forced EU governments to adopt harsh austerity measures and tough economic reforms, which have triggered incidents of social unrest and massive protests in many European countries, including Greece, Spain, Portugal, and Italy.