Euro zone finance chiefs on Monday recommended against additional stimulus measures in spite of forecast economic contraction in the region and in Latin America.
“All ministers in the Eurogroup, including the European Central Bank, agree that the fiscal efforts launched by the euro zone countries should be sufficient for the time being,” said Jean-Claude Juncker, Luxembourg prime minister and the chairman of the Eurogroup of euro zone finance ministers.
Juncker's view was echoed by Austrian Finance Minister Josef Proell at a regular monthly meeting of the Eurogroup. “We have a lot in the pipeline...Many elements of the stimulus packages, many of our tax reductions will only start to have an effect in the coming weeks and months,” Proell said.
The European Commission forecast earlier on Monday that the euro zone economy will contract by 4% this year and by a further 0.1% next year, plunging into the deepest and most widespread recession since the Second World War.
It was a sharp revise-down from a January estimate, which forecast a contraction of 1.8% for the EU and 1.9% for the euro zone this year before positive growth for both areas next year.
Meanwhile, economy of Central and South America, which is busying combating the A/H1N1 influenza, will shrink over 0.3% in 2009, said the Economic Commission for Latin America and the Caribbean (ECLA).
Mexico, the center of the epidemic, will be hardest hit with impacts on its tourism, transportation and food industries as the virus continues to spread. The country is to see a deep reduction of 2% in its economy this year, said ECLA.
The World Health Organization (WHO) Monday said it had received reports of 1,003 confirmed cases of A/H1N1 influenza from 20 countries, warning of “many surprise” changes in its evolvement.
The initial situation can change “in many ways, with many, many surprises,” said WHO Director-General Margaret Chan. “Historically, influenza pandemic has encircled the world in two, sometimes three waves,” she said, citing the deadliest 1918 pandemic.
Major epidemic outbreaks usually mean dwindling business opportunities and reluctant trade. In 2008, a flu pandemic cost $3 trillion and caused a nearly 5% drop in world gross domestic product, according to the World Bank.
Observers have feared the flu could reverse initial gains in the fight against the economic recession, thus delaying the process toward an end of its grips on the world economy. (Xinhua)