Brussels, 25/05/2005 (Agence Europe) - On Wednesday the Organisation for Economic Cooperation and Development (OECD) revised its forecasts for the euro zone in 2005 to 1.2% as opposed to the 1.9% last autumn. The scenario for recovery as previously thought has not materialised throughout the OECD zone and if economic prospects appear “solid in Asia” and a return to trends experienced in the USA but are still “weak and uncertain in Europe”. In the USA, prospects for growth have been revised upwards to 3.6% compared to forecasts in November 2004 (3.3%). Asian growth has now stabilised at 1.5% as opposed to 2.1%. Overall, the rise in economic activities in thirty countries of the OECD is expected to be around 2.6% in 2005 and 2.8% in 2006.
Jean-Philippe Cotis explained in an editorial that “it is becoming increasingly evident that circumstantial arguments (Iraq war, oil and commodity price shocks, exchange rate fluctuations…) are not sufficient to explain the string of aborted recoveries in Continental Europe… Although on the surface recorded growth picked up somewhat in early 2005, it is flagging anew and no decisive upturn is in the offing before late this year”. En France growth is not expected to be above 1.4% in 2005, in Germany it will barely reach 1.2%, in the Netherlands and Portugal it will platform out at 0.5% and 0.7% respectively. According to the OECE, the situation in Italy is not encouraging and GDP is expected to fall by 0.6% this year. Spain has experienced growth of 3%, compared to 2004, and Ireland is expected to attain a rate of 5.3%. Cotis says supporting internal demand remains the main task in the euro zone. He also believes that the European Central Bank (ECB) has a role to play by cutting short term interest rates by half a point to 1.5%. Cotis believes that in the current context of low underlying inflation and sluggish activity, there are strong arguments in support of greater flexibility in monetary policy.