ECB confident, but oil prices still a worry

The Governing Council of the European Central Bank is “confident that the improvement in economic activity will continue”, according to the ECB’s monthly bulletin for August.

Economic growth outside the euro area is reported to be robust and should continue to foster euro area exports.

Employment growth should lead to an increase in real disposable income, in turn leading to an upturn in private consumption, the ECB says.

However, the bank does warn that high oil prices “may dampen growth dynamics, both globally and through their impact on the euro area’s terms of trade”.

Furthermore, there is still concern about the persistence of global imbalances.

With regard to price developments, oil prices “continue to exert upward pressure on the general price level over the short term”.