Economic growth may return sooner than expected to the 16 nations using the euro, European Central Bank chief economist Juergen Stark said in an interview published on Thursday. "There are indeed some signs of stabilisation of economic activity at the moment," Stark told the business newspaper Boersen Zeitung.
"They indicate that positive growth could be expected sooner than forecast." Official European Union data released on Thursday showed that the eurozone economy contracted by just 0.1 percent in the second quarter, as Germany and France unexpectedly emerged from recession.
Nevertheless the latest overall eurozone figures, from the official Eurostat statistics agency, mark the fifth quarter running of shrinking gross domestic product for the eurozone as a whole. Stark warned against premature optimism. "You have to put it in perspective," he said of the "green shoots" popping up in Europe.
"What we are seeing is based primarily on stimulus measure by the governments and the re-stocking of warehouses. Seen in that light, we cannot count on a durable return to a growth course." His remark about re-stocking being a main factor appeared to conflict with analysis in France by the INSEE statistics agency that French growth had been boosted by other factors, and that de-stocking was continuing.
The German and French data is being examined with particular care by analysts since the figures are far stronger than the expected outcome, which was for continued contraction in both countries. Stark added that he saw the risks of deflation in the eurozone as "very limited" and reiterated that he considered the main ECB interest rate, now set at a record low of 1.0 percent, to be "appropriate".
A panel of experts polled by the ECB were more pessimistic, revising their 2009 forecast for the eurozone downward by 1.1 percentage point to show a decline of 4.5 percent, according to the bank's monthly bulletin. In 2010, the experts forecast 0.3 percent followed by a 1.5-percent rise in GDP in 2011. The ECB expects a downturn of 4.6 percent this year and of 0.3 percent next year according to official forecasts made in June. Its next forecasts are to be published in September.
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