Praet said there was still risk of another
slowdown in the euro zone's third-biggest economy if economic
reforms were not brought in.
"To stay on a sustainable path, it's essential that the
government maintain its commitments," the economist told Italy's
La Stampa newspaper. "You cannot afford any slippage on the
public accounts."
Praet said fundamental issues such as labor market flexibility
and bureaucracy had to be addressed, particularly in an economy
that included a large number of small businesses.
"The cost of labor is too high," Praet said. "That is not to say
wages are too high — in fact they are low on average, compared
with many other countries. The problem is that productivity has
grown too little."
Praet also said the ECB was ready to act if banking credit dries
up and threatens a recovery in the euro zone, although he added
that the outlook for investments in the region was improving.
"We think that spending on investments will start to pick up in
2014," he said.
Asked how he would respond to those who proposed leaving the
euro as an option for Italy, Praet said discussions about
abandoning the single currency "do not reflect reality".
Italy's economy remained flat in the third quarter after two
years of contraction, but a spokesman for national statistics
bureau ISTAT said earlier this month that was insufficient to
show the recession was over.
Before rounding, GDP showed another marginal decline between
July and September, he added.
(Reporting by Steve Scherer and Isla
Binnie; editing by Jane Merriman)
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