AGL 40.10 Increased By ▲ 0.10 (0.25%)
AIRLINK 127.31 Increased By ▲ 0.27 (0.21%)
BOP 6.59 Decreased By ▼ -0.08 (-1.2%)
CNERGY 4.48 Decreased By ▼ -0.03 (-0.67%)
DCL 8.53 Decreased By ▼ -0.02 (-0.23%)
DFML 42.00 Increased By ▲ 0.56 (1.35%)
DGKC 87.71 Increased By ▲ 0.86 (0.99%)
FCCL 32.62 Increased By ▲ 0.34 (1.05%)
FFBL 65.15 Increased By ▲ 0.35 (0.54%)
FFL 10.26 Increased By ▲ 0.01 (0.1%)
HUBC 109.75 Increased By ▲ 0.18 (0.16%)
HUMNL 14.64 Decreased By ▼ -0.04 (-0.27%)
KEL 5.12 Increased By ▲ 0.07 (1.39%)
KOSM 7.57 Increased By ▲ 0.11 (1.47%)
MLCF 41.65 Increased By ▲ 0.27 (0.65%)
NBP 59.71 Decreased By ▼ -0.70 (-1.16%)
OGDC 193.65 Increased By ▲ 3.55 (1.87%)
PAEL 28.25 Increased By ▲ 0.42 (1.51%)
PIBTL 7.78 Decreased By ▼ -0.05 (-0.64%)
PPL 151.98 Increased By ▲ 1.92 (1.28%)
PRL 26.50 Decreased By ▼ -0.38 (-1.41%)
PTC 16.20 Increased By ▲ 0.13 (0.81%)
SEARL 84.40 Decreased By ▼ -1.60 (-1.86%)
TELE 7.69 Decreased By ▼ -0.02 (-0.26%)
TOMCL 35.39 Decreased By ▼ -0.02 (-0.06%)
TPLP 8.11 Decreased By ▼ -0.01 (-0.12%)
TREET 16.00 Decreased By ▼ -0.41 (-2.5%)
TRG 52.70 Decreased By ▼ -0.59 (-1.11%)
UNITY 26.38 Increased By ▲ 0.22 (0.84%)
WTL 1.25 Decreased By ▼ -0.01 (-0.79%)
BR100 9,953 Increased By 69.4 (0.7%)
BR30 30,908 Increased By 307.7 (1.01%)
KSE100 93,785 Increased By 429.6 (0.46%)
KSE30 29,050 Increased By 119.3 (0.41%)

The euro's appreciation on the foreign exchanges poses the most immediate risk to economic recovery in the dozen countries that share the currency, an influential survey showed on Tuesday.
European business group UNICE said its twice-yearly survey of economic prospects showed businesses had revised upwards 2004 growth forecasts for the euro zone to 1.9 percent from 1.7 percent and were looking for growth of 2.2 percent in 2005.
"The most immediate cause for concern is the possibility of a further appreciation of the euro against the dollar," it said.
"The current volatility in the foreign exchange markets and the rapid appreciation of the euro is seen as one of the main risks to the nascent economic recovery," it added.
The euro's exchange rate against the dollar was considered too high by all euro zone respondents when they were surveyed in February - a month in which the euro averaged about $1.2670, UNICE said.
The survey was compiled from responses from UNICE's national member federations, such as the Confederation of British Industry, Germany's BDI, France's Medef, and Italy's Confindustria.
Those surveyed in France said a euro rate above $1.10 would significantly hurt the European economy while German and Greek ones put the pain threshold at $1.20.
Those polled in other euro zone countries put it at $1.30 or higher.
Respondents from five of the 12 euro zone countries expected the euro would by August be trading at or above the pain threshold they had cited for the European economy.
The persistence of international tensions and the possibility of new terrorist acts were also commonly quoted risks, with the latter being cited even by those who responded before the Madrid bombings of March 11.
HIGHER EURO NOT ALL BAD NEWS: The euro's appreciation was seen having some positive effects, such as offsetting the impact of an increase in oil prices.
"If the euro's appreciation translates into lower inflation prospects, this could provide the ECB (European Central Bank) with some room for manoeuvre."
A slight majority of those surveyed said monetary policy was appropriate with opinion finely divided as 46 percent considered it too tight.
UNICE said inflation was expected to remain under control and that while it had been more stubborn than expected, it was not a source of concern. Its survey forecast inflation at 1.8 percent this year and next.
Also, worries about the risk of deflation had dissipated, it said.
A lack of confidence among consumers was seen as one of the reasons for the delay in economic recovery and the slow pace of the pick up.
"The recovery is there but it is fragile and largely dependent on external factors; the necessary return of confidence remains elusive," UNICE said.
The survey, conducted before the Madrid bombings, also showed that none of UNICE's member federations expected a deterioration in the business climate.
Business profitability was expected to improve or remain unchanged in all countries except Spain and investment was also seem recovering.
Still, a large number of the respondents said the strength of the euro was exerting some pressure on profitability and that a further rise could call into question the expected recovery in profitability, according to UNICE.

Copyright Reuters, 2004

Comments

Comments are closed.