Brussels, 11/12/2003 (Agence Europe) - In its last monthly report adopted on Thursday, the European Central Bank (ECB) is counting on 1.6% economic growth in the Euro zone in 2004 and an inflation rate of 1.8%. It is hence confirming its growth forecasts but clearly had to revise them upwards for inflation, which in June it had forecast a rate of 1.3%. The ECB has revised its forecasts for medium term growth in the Euro zone downwards for 2003 (0.4% as opposed to 0.7% forecast in June). this is in keeping with the most recent European Commission forecasts. For 2003 the ECB s forecasting an inflation rate of 2.1% (2.3% in 2002, whereas it was expecting 2% in June. For 2005, the ECB is forecasting an acceleration in growth in the Euro zone up to 2.4% and a reduction in inflation to 1.6%.
In its report, ECB experts acknowledge that the rise of the Euro compared to the dollar is going to hit exports. They are expecting a slight decrease (-0.2%) in exports before bouncing back: average rise of 4.4% in 2004 and 6.6% in 2005. The ECB is also expecting a gradual improvement in individual rates of consumption in the Euro zone: on average it is expected to have grown by 1.2% in 2003, 1.6% in 2004 and 2.2% in 2005. Household consumption will benefit from more slack on the jobs market but could be hampered by ongoing reforms in social security and pension reforms, warned the ECB.