2004-12-08 08:17:28 ECB's Issing sees euro zone growth picking up, Q3 slow-down 'temporary' UPDATE (Updates with Issing comments on inflation)
FRANKFURT (AFX) - European Central Bank chief economist Otmar Issing said the slowing of euro zone economic growth in the third quarter was temporary and he expects growth rates to pick up again
"I think there are strong indications that the growth slow-down in the third quarter was due to temporary factors," Issing told the Financial Times Deutschland in an interview
He expects growth to "pick up and reach rates roughly in line with potential", he said
The ECB defines the euro zone's potential annual growth rate as 2.0-2.5 pct, although Issing has often said that due to weak investment the potential is currently closer to the bottom end of that range
Euro zone growth slowed to 0.3 pct in the third quarter compared with the second quarter, for an annual rate of 1.8 pct
Issing reiterated that the ECB considers the recent sharp appreciation of the euro "unwelcome" and "brutal", but said net trade is not the driving force behind the euro zone economic recovery
"It seems to me that there is a misperception of what was driving growth and the recovery in the euro area. The contribution of net trade was negative in 2003. In 2004 it will be about zero and in our projections it is expected to be roughly zero in 2005 and 2006," he said
Issing said the ECB, which has cut its 2005 growth forecast to 1.9 pct from 2.3 pct, is forecasting a "gradual recovery" over the next two years
Private consumption should pick up in line with real disposable incomes, and the labour market should improve slowly
"What is different in our staff's latest projections is that the stronger acceleration that we had initially expected in 2005 probably will not materialise," he said
"But the positive message is that we will have a continuation of this moderate growth." Issing said the ECB must ensure that inflation expectations do not rise as a result of higher oil prices, as this would endanger the economy
"We are in a critical situation in terms of inflation expectations," he said
"Our credibility in maintaining price stability must not be put in question. If that happened...it would be reflected in wage contracts and long-term interest rates, and we would be in a situation that would be extremely detrimental for the economy and the people of the euro zone." Issing said that in the context of higher oil prices "you see inflation expectations deteriorating somewhat"
"So it is crucial that, looking beyond this direct impact, markets and people expect price stability to be restored."
ECB´s Issing sees euro zone growth picking up, Q3 slow-down ´temporary´
notíCIas_pt
6
08-12-2004 02:58
Disclaimer:
O Clubeinvest.com informa que nenhuma da informação
aqui facultada deverá ser entendida como conselho ou recomendação
de qualquer tipo de transacção ou investimento.
