By DAVID McHUGH
FRANKFURT, Germany (AP) â¿¿ European Central Bank President Mario Draghi is urging indebted governments to move beyond spending cuts and tax hikes and introduce reforms that would boost growth and reduce the "tragedy" of unemployment.
Speaking after the bank's monthly policy-setting meeting, Draghi praised the progress made by the 17 European Union countries that use the euro in controlling their deficits in an effort to dig out of the region's 3 Â½-year economic and financial crisis.
Governments cut the average budget shortfall to 3.5 percent of economic output last year from 4.2 percent the year before.But government cutbacks have plunged the eurozone economy into recession and sent its jobless rate to 11.9 percent, highest since the euro was launched in 1999. The ECB lowered its economic forecast for this year Thursday, saying the region's economy would shrink 0.5 percent instead of by the 0.3 percent projected in December. Draghi went out of his way to urge steps for growth, such as shaking up hiring rules and simplifying regulations affecting the products companies make. The ECB president said that austerity must be followed up with a "comprehensive structural reform agenda" to encourage growth and job creation in countries that have left large numbers of 20-somethings on the margins of their stagnant economies. In Greece, the unemployment rate for the under-25s is 59 percent while in Spain it is 55 percent. He said it was "of particular importance" to tackle youth joblessness. Unemployment is "a tragedy, and youth unemployment is an even bigger tragedy," Draghi added. Economists say that ultimately growth is the only way to reduce the large debt burdens weighing on eurozone governments such as Spain and Italy, and the three countries that have needed bailout loans from other countries: Greece, Ireland, and Portugal. Growth increases tax revenues as more people get jobs and businesses make more profits. Meanwhile, a bigger economy makes the debt smaller by comparison.