Frankfurt am Main (AFP) - The European Central Bank on Thursday slashed its growth and inflation forecasts for 2019 as "uncertainties" ranging from geopolitical risks to trade rows darken the eurozone economy.
Unveiling updated forecasts, ECB chief Mario Draghi said the bank now expects the region's economy to expand by just 1.1 percent this year, down from 1.7 percent previously.
The downgrade is in line with equally gloomy projections from other institutions like the International Monetary Fund and the OECD in recent weeks.
The revisions come as fears grow over a global slowdown in the face of Brexit uncertainty, US-led trade tensions and sluggish Chinese growth.
"The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment," Draghi told reporters in Frankfurt.
"The risks surrounding the euro area growth outlook are still tilted to the downside," he added.
Draghi said the bank was pencilling in inflation of 1.2 percent this year, a far cry from the 1.6 percent it had forecast previously and pushing the ECB further away from its target of achieving price growth of just under 2.0 percent.
"The weaker economic momentum is slowing the adjustment of inflation towards our aim," Draghi said.
Looking further ahead, the ECB revised its 2020 growth outlook downwards from 1.7 to 1.6 percent while keeping the 2021 forecast unchanged at 1.5 percent.
Inflation meanwhile is projected to ease to 1.5 percent in 2020 and 1.6 percent in 2021, down from 1.7 and 1.8 percent earlier.
Draghi stressed that the bank stood ready to take action to combat the slowdown.
He reiterated that the ECB would continue to provide "significant" stimulus through record-low interest rates, a fresh round of cheap loans to banks and by reinvesting the proceeds from maturing bonds, which will help keep borrowing costs low.
He also expressed confidence in the underlying strength of the eurozone.
"The euro area expansion will continue to be supported by favourable financing conditions, further employment gains and rising wages, and the ongoing –- albeit somewhat slower -– expansion in global activity."
The euro fell by 0.5 percent against the dollar by 1425 GMT, to hit its lowest level since mid-November.
