Brussels, 06/09/2002 (Agence Europe) - On Friday, the European Commission reviewed its estimates on economic growth in the euro zone downward. It is now tabling on a rise in GDP of between 0.3% and 0.6% not only for the third but also for the fourth quarter (compared to earlier forecasts of 0.6% to 0.9%).
The Commission says its expects there will be faster recovery in the second half of the year but recovery that is less marked than what it had hoped for earlier. This deterioration would be explained, it says, by the low level of consumer demand and of investment. The Commission is also concerned about the recent developments of stock market rates, the volatility of financial markets, the risks of contagion that the economic crisis will affect several Latin American countries and the impact that the situation in the Middle East will have on oil prices. The Brent oil rate in fact climbed to its highest level for nearly a year, on Friday morning in London, because of the increased risk of war after the American-British air raid against air defence installations in Iraq. Towards midday, the Brent barrel from the North Sea for delivery in October was going for $28.45. The Commission considers, on the other hand, that the monetary situation is favourable.
According to the German newspaper Börsen-Zeitung, the Commission should bring down its economic growth forecast for the euro zone in 2002 from 1.4% to 1%, which was confirmed on Friday by Belgian Economy and Finance Minister Didier Reynders. In its spring forecasts made in April this year, the Commission predicted that growth of the Twelve would on average be 1.4% this year and 2.6% as an annual rate for the fourth quarter. In November, the Commission will publish its detailed autumn forecasts.
According to estimates published on Friday by Eurostat, the GDP of the euro zone recorded growth of 0.3% for the second quarter (compared to previous quarter), while that of all EU countries is estimated at +0.4%. The rate of growth varies from 1.1% in Denmark to 0.1% in the Netherlands and is 0.3% in Germany, 0.4% in Spain, 0.5% in France and 0.6% in the United Kingdom. Compared to the same quarter of the previous year, growth would thus rise to 0.6% in the euro zone and 0.7% in the EU.