THE eurozone is expected to recover later this year thanks to an easing in monetary policy and rising foreign demand, Mario Draghi, president of the European Central Bank said in Shanghai yesterday.

"The economic situation in the euro area remains challenging but there are a few signs of a possible stabilization," Draghi said at the annual International Monetary Conference. "Our baseline scenario continues to be one of a very gradual recovery staring in the latter part of this year."

The ECB cut the benchmark interest to a record low of 0.5 percent in May, and signaled it might do so again if economic conditions worsen.

But a 1.4-percent rebound in inflation last month from 1.2 percent in April may tie the ECB's hands. Draghi said it is important that the eurozone has medium-term price stability, adding that inflation expectations have been at 1.9 percent on average over the past 13 years.

"The drivers of such a gradual recovery are the highly accommodative monetary policy and export growth caused by growing foreign demand," he told a panel of world central bank governors and top executives of global banks attending the conference, the first time it is held in the city.