The European Central Bank (ECB) is expecting the eurozone economy to grow by 1.3 to 1.7 per cent this year, by 0.7-1.7 per cent next year and by 2 to 3 per cent in 2003, the bank said in its December monthly report.
The ECB’S forecast for 2002 is a downward revision of its earlier forecast of a growth rate of 3.1 per cent. The ECB said the projected annual average growth rate for 2002 should not be misinterpreted as it masks an expected recovery in the course of 2002.
"Economic growth seems to have remained very subdued in the fourth quarter of this year as a result of continued weakness in domestic and external demand, which was reflected in low business and consumer confidence in November," it said.
Real GDP growth is likely to remain weak in early 2002, but conditions exist for an improvement in growth in the course of the year, and developments in financial markets in recent weeks signal a more optimistic assessment by market participants, the ECB said.
The ECB said its forecasts are in line with those of other institutions, such as the IMF, European Commission and OECD, even though other forecasts are not always based on assumptions of unchanged interest rates.
The IMF, EU Commission and OECD are all forecasting euro zone growth of 1.6 per cent in 2001 and of 1.3 or 1.4 per cent next year, the ECB said.
The ECB said the outlook for growth is surrounded by a high degree of uncertainty, as is often the case at turning points in economic activity.
The September 11th terrorist attacks on the US have increased uncertainty but this is expected to have only a temporary impact on eurozone domestic demand. Private consumption expected to remain robust, partly as a result of tax reductions in some countries, it said.
AFP