Experts cut eurozone growth forecast to 1.4%
In the quarterly Survey of Professional Forecasters published in the bulletin yesterday, the ECB said:
“The downward revision of growth prospects for 2003 seems to be the result of high uncertainty associated with geopolitical tensions which are affecting the global economic and financial situation.”
The survey also revealed that the economists expect the annual rate of inflation in the euro area to reach 1.8% this year.
The ECB said that the respondents were sticking to their previous assessment that inflation will average 1.8% in 2003 and in 2004.
That was comfortably below the level of 2% which the ECB sees as the maximum tolerable level of inflation.
The ECB also noted that the forecasters had slightly revised forecasts for inflation next year to 1.8% from 1.9%.
“Survey participants stress, however, that the possibility of oil price hikes in the event of an escalation of tensions in the Middle East remains a serious risk over the short run,” the bank said.
The survey participants are, according to the ECB, experts affiliated with financial or non-financial institutions based within the European Union.
The latest consensus of analysts also revises the eurozone unemployment rate slightly upwards from the experts’ previous forecast of 8.4% to 8.6%.
Ireland’s unemployment rate still remains well below the average eurozone figure at just below 5%.
Eurozone interest rate futures hit a new contract high yesterday after the European Central Bank reiterated its view on the economic uncertainty stemming from a possible war with Iraq.
In its monthly bulletin, which largely repeated the statement the bank made after it left interest rates unchanged at 2.75% last week, the ECB said current rates were appropriate.
“There are no outright hints of a rate cut but the report is reasonably dovish,” said GNI economist Aongus Buckley.
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