Trichet: Euro zone approaching potential growth

Recent euro-zone economic figures suggest that the region is experiencing a "progressive" economic recovery close to its potential, but it remains "badly hampered" by weak labor productivity, especially compared to the U.S., European Central Bank President Jean-Claude Trichet said Monday.

Trichet told the International Monetary Conference in Washington, D.C., that the euro zone is "progressively" recovering close to its growth potential of around 2 percent, though the ECB head said he remains "very cautious, very prudent" about the economic outlook.

Trichet added that since the creation of the single euro-zone currency, employment gains have been "a little bit more flattering" compared to the U.S.

But the region remains at a disadvantage due to relatively weak productivity growth, Trichet said, and emphasized the need for structural economic reforms to boost productivity.

"We are badly hampered by the fact that labor productivity is not satisfactory at all," Trichet said.

Trichet said the central bank must also closely monitor the evolution of unit labor costs.

Trichet cautioned at the start of his remarks that he wouldn't address the monetary policy outlook, citing the ECB's upcoming meeting on Thursday.

The ECB is expected to raise rates at that meeting by at least 25 basis points from their current 2.5 percent level, reports AP.