EU concerned over euro rise, keeps ‘08 growth view

EU

Trichet says sees ongoing euro zone growth. The European Comission expressed concern on Wednesday about the euro’s rise, saying it added to the strengthening headwinds facing euro zone growth, but stuck to its 1.8% forecast for 2008 economic growth.

European Central Bank President Jean-Claude Trichet said on Wednesday he saw ongoing GDP growth looking forward, but upward risks to price stability in the medium term. “Incoming information confirms the picture of moderating growth. Looking forward, ongoing growth is expected,” Trichet said in his opening remarks to the European Parliament’s Economic and Monetary Affairs Committee. He added that the euro area economy had sound fundamentals and was not suffering from major imbalances. “The incoming information has confirmed our assessment of prevailing upside risks to price stability over the medium term in the context of continued vigorous money and credit growth,” Trichet said. The ECB has kept interest rates on hold at 4% since June while national central banks have been cutting rates. The ECB wants to keep a lid on inflation -- currently at a record 3.3% -- but has faced pressure to cut rates in the face of slowing euro-zone growth. Economists believe the ECB will probably cut rates in May or June, a Reuters poll showed on Tuesday.

 

In a quarterly report on the economy of the 15 countries using the euro, the Commission noted rising uncertainty about how long turmoil on financial markets would last, how much it would cost and which institutions would be hit the most. The turmoil has affected investor confidence and the cost of credit, hampering growth. Euro zone growth would also slow this year because the US economy was already in or on the brink of recession, according to economists. “In the case of the euro area, the impact of the US downturn will also depend on developments in exchange rates,” the European Union’s executive arm said in the report. “In this respect, excessive volatility and disorderly movements in exchange rates are undesirable for economic growth and, in the present circumstances, excessive exchange rate moves are a source of concern,” it said.

The remarks are similar to the statement from euro zone finance ministers and the European Central Bank, meeting in an informal forum called the Eurogroup, from early March. The euro hit all-time highs at just above $1.59 on March 17. It has since fallen back, but is on the rise again. The report said record-high inflation, which in February hit 3.3% in annual terms, was another downside risk to euro zone growth. (Reuters)

 


 

 

 

ADVERTISEMENT

Varga puts 2021 GDP growth at 7-7.5% Analysis

Varga puts 2021 GDP growth at 7-7.5%

Opposition parties to begin PM candidate primaries Elections

Opposition parties to begin PM candidate primaries

New managing director at the helm of Wolt Hungary Appointments

New managing director at the helm of Wolt Hungary

Budapest bike-sharing scheme boasts record ridership City

Budapest bike-sharing scheme boasts record ridership

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.