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ECB Nowotny Sees Danger Of "Lost Decade" For Euro Zone

VIENNA -(Dow Jones)- The euro zone has swung back to weak economic growth, but the economic outlook leaves no room for complacency or a quick exit of the fiscal and monetary measures implemented to counter the economic and financial crisis, said European Central Bank governing council member Ewald Nowotny Friday.

He sees the risk that weak growth in coming years could turn into a "lost decade" for Europe, like the one experienced by Japan recently.

"What we see now is a very weak upswing, and the question urging itself upon us is, whether we will succeed in turning this weak upswing into stronger growth dynamics, or whether we will see the same problem that Japan faced -that of the lost decade," Nowotny said, speaking to journalists in Vienna.

"It's a danger I won't rule out," Nowotny said.

The growth forecasted for the euro zone for 2010 and 2011 "definitely won't suffice to reduce unemployment or to stabilize the mounting budget deficits in a sustainable way," he said, adding that he also sees "large risks to forecasted economic development."

Nowotny urged that the roll-back of fiscal and monetary measures implemented to reduce the impact of the crisis is discussed very carefully and mustn't be carried out in an abrupt manner.

-By Flemming E. Hansen, Dow Jones Newswires; +43 1 513 69 22 10; flemming.hansen@dowjones.com

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