Brussels, 27/09/2002 (Agence Europe) - According to the latest forecasts of the International Monetary Fund (IMF), growth in the countries of the euro zone should reach 0.9% this year and 2.3% in 2003. In its annual report published in Washington on Wednesday, the IMF considers that "recovery in the euro zone seems to be trailing behind other regions, such as the United States and the emerging markets of Asia". In its previous report, the IMF predicted growth of 1.4% in 2002 and 2.9% in 2003.
Germany's growth rate is estimated at only 0.5% in 2002 (and 2% in 2003), against, respectively, 0.9% and 2.7% in the IMF's previous forecasts. "Prospects for industrial production and domestic demand in Germany seem particularly uncertain and new weaknesses (on the part of the German economy) could have important implications for Europe as a whole", says the IMF, noting that growth has been reasonably weak in Austria, Belgium, the Netherlands and Portugal. Greece, Ireland and Spain have had better economic performances, it acknowledges. Most of the economies of the euro zone must improve their budget situation in the medium term, the Fund recommends, especially later to allow for lower taxes and respond to the problems linked to the ageing of the population (pensions, health costs).
So far, the IMF explains, economic recovery in the euro zone since end-2001 has mainly been through exports, whereas domestic demand has remained weak. Among the factors of the resistance of the European economy, the IMF cites the reconstitution of stocks, the rise in revenue, the fall in inflation and the "amazingly robust performance of the labour market over the past few years". The Fund also expects companies in the euro zone to return to the path of investments, "as company profits and (production) capacity use increase". But exports could end up sliding, especially if the euro continues to gain ground on the exchange markets, the Fund notes. In addition, the IMF stresses that even though European households do not invest as much as American or Japanese households in the stock market, the particularly sharp fall in European markets "could have the effect of a cold shower on confidence and demand and add pressure on the balances of insurers and financial institutions".