ECB raises growth forecast for 2004

THE European Central Bank raised its economic growth and inflation forecasts for 2004 as higher global demand spurs a recovery in the eurozone.

Growth will average 1.6% next year and inflation 1.8%, the mid-points of ranges published in the ECB’s monthly report showed. In September, the ECB saw inflation averaging 1.6% in 2004 and growth of about 1.5%. The eurozone economy is accelerating as a recovery in the US and Asia spurs exports and European companies and consumers benefit from the lowest borrowing costs since 1946. The recovery is being accompanied by higher consumer prices as oil and food prices gain and some taxes increase.

“Economic growth is likely to gradually recover over the next quarters, leading to a broader and stronger upswing in the course of next year and the year after,” said the bank, which also provided its first estimates for 2005. “Inflation will fall neither as quickly nor as strongly as was expected earlier in the year.”