Global financial crisis marked beginning of low growth era: Austrian banker

The financial crisis that struck global economies in 2007 began a new era of low growth rates that continue to persist today, governor of the National Bank of Austria (OeNB) Ewald Nowotny said on Monday.

The most recent forecasts show there has been no catch-up to pre-crisis growth rates, but rather a slow recovery, Nowotny said in a speech to the OeNB's annual economics conference here.

He said at the moment global economies have been confronted with both a persistent negative production gap, coupled with lower growth rates over the longer-term.

In order to return to the pre-2007 annual gross domestic product growth rates, that were about 2.7 percent in Austria and 3.1 percent in the United States, an overall economic growth gap of nearly 15 percent would have to be closed. This is something that would only be possible if growth rates remained significantly above the current trend for a number of years, Nowotny said.

He said the weaker recovery is also partly due to uncertainty over future economic growth developments, which in turn leads households to take higher savings precautions, and companies to postpone their investments.

Nowotny said he supported quantitative easing by the European Central Bank (ECB), for which he also sits on the governing council, and added these measures have already shown "the first signs of success." Endit