ECB Chief Says Eurozone Faces Storm Clouds

European Central Bank chief Mario Draghi on Thursday warned that risks to the eurozone economy were growing, acknowledging for the first time that waning global momentum was weighing on the region's outlook.

"We were unanimous about acknowledging the weaker momentum and changing the balance of risk for growth," Draghi told reporters after the ECB's first governing council meeting of the year.

The warning comes amid mounting concern about the economy, as markets fret over Brexit, slowing Chinese growth and the fallout from US-led global trade tensions.

"The risks surrounding the euro area growth outlook have moved to the downside on account of the persistence of uncertainties related to the geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility," Draghi said.

The latest hard and soft economic data have "continued to be weaker than expected," he added, blaming "softer external demand and some country- and sector-specific factors".

Eurozone growth slowed to 0.2 percent in the third quarter of 2018, after an expansion of 0.4 percent in the two previous quarters.

Most experts believe the fourth quarter figures will also disappoint.

The darkening clouds come after the ECB in December ended a massive government and corporate bond-buying scheme that been propping up the eurozone economy.

The easy money scheme saw the Frankfurt institution pump 2.6 trillion euros into the eurozone economy over a nearly four-year period.

Its end marked the removal of a key pillar of support to the economy, with the ECB saying it was confident the region could weather upcoming headwinds and that inflation was on track to meet the bank's goal of just under 2.0 percent.

Since then however, the International Monetary Fund (IMF) has downgraded its 2019 growth forecast for the 19-nation currency bloc to 1.6 percent -- slightly lower than the ECB's 1.7-percent estimate.

Eurozone inflation meanwhile has fallen back -- notching up just 1.6 percent in December.

Draghi on Thursday stressed that the ECB's record-low interest rates and the reinvestments from maturing bonds would continue to support eurozone growth in the near future.

He added that policymakers assessed "the likelihood of a recession as being low".

And Draghi said that the ECB is 'not out of instruments' to face economic headwinds. (AFP)