European Central Bank Governing Council member Ewald Nowotny said Friday that in 2014, all of the euro zone`s member countries, except Cyprus, will have positive economic growth, adding that the euro zone has exited recession.

Speaking at an event hosted by the Austrian Central Bank, which he also heads, Nowotny said his country was proof that “moderate fiscal consolidation” beats harsh spending cuts and tax hikes in the race to recover from the global economic crisis.

“The recession is over in the Eurozone, but it must be added that growth is very weak,” he asserted. “I urge both Brussels and Frankfurt to be very cautious not to strangle growth. Both in terms of fiscal and monetary policies, growth should be given a chance to prevail.”

Nowotny expressed fear that next year the implementation of the single bank supervision and new stress tests could prompt banks to reduce lending. He added that he doesn`t see a broad-based credit squeeze in the making, but rather tightening bottlenecks.

On March 25 2013 Cyprus and the Troika (European Commission, European Central Bank, International Monetary Fund) agreed on a €10 billion financial assistance which featured an unprecedented haircut on uninsured deposits in a bid to recapitalize the Bank of Cyprus, the island`s largest lender. The bail-in also provided that Cyprus Popular Bank, the island`s second largest bank would be wound down with its good part absorbed by the Bank of Cyprus.