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Apr-29-2008Higher Inflation Emerging in Europe(topic overview)
CONTENTS:
- The European Commission sharply raised its 2008 inflation estimate for the eurozone to 3.2 percent while trimming back only slightly its growth forecast to 1.7 percent. (More...)
- The first was advanced European economies, including the 15-nation euro zone, Denmark, Sweden and Britain. (More...)
- Looking ahead to 2009, the commission predicted that economic activity would pick up towards the end of the year to about 2.0 percent in the eurozone at an annualised rate. (More...)
- The EU treaty also says the criterion has to be met in a sustainable way. (More...)
- Consumer prices have been driven up by the rising cost of fuel and food although the ECB's own forecasts suggest inflation will hit 2.9% for 2008 as a whole. (More...)
- Slovak leaders insist that adopting the euro will not lead to an inflation burst - as happened in Slovenia after that country joined the eurozone last year. (More...)
- "The financial turmoil is proving deeper, wider and longer-lasting, while the downturn in the U.S. looks set to be more pronounced and protracted than assumed in the autumn forecast,'' the commission said in today's report. (More...)
- Investment growth is weakening due to a cooling-off of overvalued housing markets and the cyclical slowdown. (More...)
- The large contraction of industrial production in the fourth quarter of 2007 suggests that gross domestic product contracted at the end of last year, the commission said. (More...)
- A weak U.S. dollar will likely hit European exporters harder in the future, the EU said, indicating a shift from earlier predictions that Europe would escape largely unscathed. (More...)
- "Turkey should be able to increase export growth -in particular in tourism- while the tight monetary and fiscal policy mix will start supporting the disinflation process," the report said. (More...)
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The European Commission sharply raised its 2008 inflation estimate for the eurozone to 3.2 percent while trimming back only slightly its growth forecast to 1.7 percent. In February, the European Union's executive arm had forecast that inflation in the 15 nations sharing the euro would reach 2.6 percent this year and that growth would be 1.8 percent. While record oil and food prices were taking their toll on growth and inflation, financial market turmoil and a U.S. slump were proving to be worse than previously expected, the commission said in its spring Economic Forecast. In the 27-nation European Union, the commission forecast inflation would reach 3.6 percent, this year instead of the 2.9 percent previously expected, but stuck to its estimate for 2.0 percent economic growth. [1] The commission forecast that the second quarter would prove to be the weakest point of the current slowdown, with quarterly growth of only 0.2 percent before the economy started picking up again. While record oil and food prices were taking their toll on growth and inflation, financial market turmoil and a U.S. slump were proving to be worse than previously expected, the commission said. In the 27-nation European Union, the commission forecast inflation would reach 3.6 percent this year, instead of the 2.9 percent previously expected, but stuck to its estimate for 2.0 percent economic growth.[2]
For 2009, the Commission forecast said inflation will ease to 2.2 percent in the eurozone and 2.4 percent in the EU. "The biggest changes in our forecasts when we compare these figures with the previous ones regard inflation for 2008 for well-known reasons, (namely) oil price increases, commodity price increases and food price increases," Almunia told reporters at a press conference, adding rising prices are posing challenges not only for economic reasons, but also for social reasons. Almunia said throughout 2008 inflation was expected to peak in the second quarter and then fall back in the latter half. The European Commission lowered its forecast for economic growth in the eurozone this year to 1.7 percent, slightly down from the 1.8 percent predicted by the EU's executive arm in its previous forecast in February.[3] The European Commission has sharply raised its 2008 inflation estimate for the euro zone to 3.2%. In its Spring economic forecast, it trimmed back its growth forecast only slightly to 1.7%. In February, the body had forecast that inflation in the euro zone would reach 2.6% this year and that growth would be 1.8%. For Ireland, the commission is predicting GDP growth of 2.3% this year. While record oil and food prices were taking their toll on growth and inflation, financial market turmoil and a U.S. slump were proving to be worse than previously expected, the commission said.[4] The European Commission has said that financial market turmoil, a slowing U.S. economy and soaring commodity prices will curb growth in the region more than expected. In its spring economic forecast, the Commission says euro zone growth will slow to 1.7% this year and 1.5% next year, that is down from 2.8% and 2.6% in the last two years. European economic and monetary affairs commissioner Joaquin Almunia said: "This shows some impact coming from the financial turmoil and the U.S. slowdown indeed, but from the second quarter of the year onwards, we start again growth in the EU and the euro area and this allows us a positive profile regarding growth at the end of this year and in particular throughout 2009."[5] EU GDP rose by 2.8 per cent in 2007, while euro area GDP increased by 2.6 per cent in the same year. The EU executive had issued more positive estimates for 2008 in its autumn forecast. The commission Monday blamed the European slowdown on the persistent turmoil on the financial markets, soaring commodity prices and the poor performance of its main trading partner, the United States. "Economic growth is moderating in the EU and euro area and the current, imported inflationary pressures are a matter of concern," said EU Economic and Monetary Affairs Commissioner Joaquin Almunia in presenting his spring economic forecasts.[6]
'Economic growth is moderating in the EU and euro area and the current, imported inflationary pressures are a matter of concern,' economic and monetary affairs commissioner Joaquin Almunia said of the commission's latest set of economic forecasts. The European Union's executive arm is now expecting growth of 1.7 percent this year rather than the 1.8 percent it predicted in its interim forecasts published on Feb 21. For next year, it has cut its growth projection to 1.5 percent from the 2.1 percent given in its autumn forecasts published on Nov 9.[7] The latest Italian government forecasts put 2008 GDP growth at 0.6 percent. Brussels also revised its growth forecasts for the euro zone downwards, from 1.8 percent to 1.7 percent for this year, and for the 27-member European Union, which it said would grow 2 percent this year. On the public accounts front, the EC report said Italy's budget deficit would rise from the 1.9 percent posted in 2007 to 2.3 percent this year and 2.4 percent in 2009. It also revised its forecasts for Italy's debt mountain, which is the third biggest in the world. It said public debt would stand at 103.2 percent of GDP this year compared to its previous forecast of 102.9 percent. During his two years in power, outgoing center-left Premier Romano Prodi worked hard to straighten Italy's public accounts which deteriorated sharply under Silvio Berlusconi's 2001-2006 stewardship. EU Economic and Monetary Affairs Commissioner Joaquin Almunia has urged Berlusconi, who returns to power after winning Italy's general election earlier this month, to follow Prodi's "extremely successful" debt-cutting efforts.[8] ROME, April 28 (Xinhua) -- The European Commission (EC) cut its2008 economic growth forecast for Italy again on Monday and warned that the country's budget deficit was back on the rise, according to Italian News Agency ANSA. Publishing its spring forecasts for countries in the European Union, Brussels said it expected Italy's economy to grow by just 0.5 percent this year and 0.8 percent in 2009, stressing that this was "clearly below its potential." Last November, the European Commission predicted a 1.4 percent increase in Italian GDP this year, a figure it revised down to 0.7percent in February. The EC figures were rosier than those of the International Monetary Fund, which earlier this month revised its 2008 GDP growth forecast for Italy down from 0.5 percent to 0.3 percent.[8] Britain will find itself alone among the 27 nations of the European Union next month in facing disciplinary action from the European Commission over the gap between its spending and borrowing. The UK is the only member of the EU on course to breach agreed rules on the size of its budget deficit, the Commission said yesterday, pitching the Government into an embarrassing row with Brussels over its handling of the economy. The Commission's latest forecasts for economic growth across the EU predict that UK GDP growth will slow to 1.7 per cent this year and 1.6 per cent in 2009, down from 3 per cent in 2007. That would result in the UK's budget deficit widening to 3.3 per cent of GDP both this year and next, up from 2.9 per cent last year and in breach of the 3 per cent limit agreed under the terms of the Maastricht Treaty.[9] While the Commission's disciplinary powers are theoretical when it comes to the UK, because it has not joined the single currency, Mr Almunia's criticisms will nevertheless embarrass the Government. The Commission said it expected the other 26 members of the EU to meet its threshold this year. The UK's budget deficit compares unfavourably with the 3 per cent the EU forecasts for France this year, though Mr Almunia warned Nicolas Sarkozy's government that it too was close to breaching the limit. Threats of action against other countries previously forecast to have difficulties with the 3 per cent rule - including Portugal, Slovakia, the Czech Republic and Poland - have been withdrawn after action taken in these countries to curb their deficits. The row centres on the EU's forecasts for UK economic growth, which are substantially lower than those made by the Chancellor, Alistair Darling, in last month's Budget. Mr Darling expects GDP growth to be between 1.75 and 2.25 per cent this year, and between 2.25 and 2.75 per cent in 2009. A Treasury spokesman said that on this basis, the Government was comfortable with its plans on spending and taxation. He said: "The 2008 Budget confirmed that the UK is delivering a sustainable increase in public investment - which is fully consistent with a prudent interpretation of the Stability and Growth Pact - while continuing to meet the Government's strict fiscal rules over the cycle, maintaining low debt and sustainable public finances." Forecasts from independent economists, including those at the International Monetary Fund, for the UK's performance this year and next have generally been much closer to those produced by the Commission yesterday.[9]
Joaqu''n Almunia, economic and monetary affairs commissioner, said: "Inflation is the major problem. in the short term." The predicted slowdown in inflation will encourage leaders critical of the European Central Bank, such as President Nicolas Sarkozy of France and Silvio Berlusconi, Italy's prime minister-elect, to argue for what they see as an overdue interest rate cut. Their argument will be bolstered by price data from Germany indicating that eurozone inflation fell back in April, bringing at least temporary relief to the ECB. Germany's inflation rate dropped to 2.6 per cent this month from 3.3 per cent in March ''' far lower than expected ''' and economists predict the eurozone rate, to be published on Wednesday, could fall to 3.3 per cent. The Commission's forecasts suggest the slowdown is taking its toll on the budget balances of certain countries, notably France and the UK. France is forecast to have a budget deficit of 2.9 per cent of gross domestic product this year and 3 per cent in 2009 while the UK deficit is projected to be 3.3 per cent in both years.[10] The European economy will slow for a third year in 2009 as faster inflation weighs on consumer spending and discourages the European Central Bank from cutting interest rates, the European Commission said. Economic growth in the euro region will slow to 1.5 per cent next year, the commission said today in its spring economic forecast, 0.6 percentage point less than it projected in November and below the 1.7 per cent expansion expected for 2008. Inflation will jump to 3.2 per cent this year, 0.6 per cent more than the commission's February forecast, before easing to 2.2 per cent in 2009. "I'm surprised they felt the need to bring it down so far," Jonathan Loynes, chief European economist at Capital Economicsin London said. "It's very early days, there are an awful lot of uncertainties."[11]
People with lower incomes will be hurt first as high prices make it increasingly difficult to avoid the global slowdown, EU Economic and Monetary Commissioner Joaquin Almunia said. The EU is now predicting that inflation in the euro economy would rise more than a full point to an average 3.2 percent this year, from 2.1 percent last year. That is far above the European Central Bank's recommended guideline of just under 2 percent. The EU also cut its growth forecast for the 15-nation currency zone Monday to 1.7 percent, well below growth of 2.6 percent last year, saying the current outlook was "unusually uncertain."[12] The euro slid to $1.5623 on Monday afternoon in New York from $1.5635 in late Friday trading in New York. The euro's 15.0% rise against the dollar over the past year is particularly painful for the continent's manufacturing companies, whose already-high labor costs rise relative to those in other currency zones. In its semi-annual forecast, the Commission said that soaring prices of food, oil and metals would raise the cost of producing other goods, sending inflation soaring well above last year's figure of 2.1% and the European Central Bank's target of 2.0%. The commission also offered mediocre forecasts for economic growth this year of 1.7% and 1.5% for 2008.[13]
FRANKFURT, Germany The International Monetary Fund said last week that the global credit crisis and persistent gloom over the U. S. economy have dampened the outlook for European economic growth. "Europe has so far been relatively resilient to the U. S. slowdown and the global financial turbulence, but the historical record suggests these will increasingly take their toll," said Michael Deppler, director of the IMF's European Department. The IMF forecast that the fallout from the credit crisis would combine with the near-record strength of the euro and soaring food and energy prices to knock inflation-adjusted GDP growth across Europe to 2. 6 percent this year from 3. 9 percent last year "with growth rates in the advanced economies projected to fall well below potential for some time.” The IMF broke down its forecast in two categories.[14] Growth of 1.7% in 2008 would represent a sharp fall from last year's 2.6% increase. "The moderation in growth results from persisting turmoil in the financial markets, the marked slowdown in the U.S. and soaring commodity prices, all of which are taking their toll on global activity," the Commission said in its latest update. Outside the eurozone, Brussels now believes the UK economy will grow 1.7% this year, well below the government's own 2.25% forecast. The European Commission's forecast could be seen to be on the optimistic side after the IMF predicted growth of just 1.4% this year.[15] The European Commission has again downgraded its forecast for eurozone growth this year, blaming weakness in the U.S. economy and financial turmoil. Brussels now believes the 15-nation eurozone will grow 1.7% this year, below its previous projection of 1.8%. It believes inflation will accelerate to 3.2% for the year as a whole compared to 2.1% in 2007.[15]
Europe's outlook for economic growth and inflation deteriorated sharply on Monday as official forecasts showed the U.S. downturn and the turmoil in world financial markets damping prospects. In its latest six-monthly forecast, the European Commission said economic growth in the 27-nation European Union would slow to 1.8 per cent in 2009 from 2.0 per cent this year.[10] BRUSSELS: Growth forecasts for world's largest economy, the European Union (EU) were Monday cut by about half a percentage point to 2 per cent this year and 1.8 percent in 2009, according to latest estimates by the European Commission.[6] Brussels inflicted a double embarrassment on Alistair Darling yesterday, challenging his economic forecasts as too rosy and starting disciplinary action against Britain for allowing its finances to slide too deep into the red. In the latest blow to the Chancellor, the European Commission threw its weight behind the attacks of other leading institutions on his upbeat Budget prediction that Britain's economy would rebound strongly next year after a lacklustre 2008. Brussels cut its forecast for UK growth this year from 2.2 per cent to 1.7 per cent, although this was still just in line with the bottom of the Treasury forecast of 1.75 to 2.25 per cent. In the latest challenge, however, to Mr Darling's claims that the economy will enjoy a resurgence next year, the Commission also cut its forecast for 2009 to 1.6 per cent.[16]
"In our hypothesis, which is to say under unchanged policies, the deficit will be 3.0 percent next year, which means that France is dangerously approaching the reference level," Almunia told reporters. "Any deviation, even the slightest, would result in an excessive deficit again," he said. France late last month revised upwards its own forecast for the public deficit this year to 2.5 percent. In reaction to the commission's update, French Finance Minister Christine Lagarde said she was "not changing" the government's forecasts and said she was "at ease" with the prospect of getting a deficit warning from Brussels. She accused the commission of not "taking account of the impact" of the government's recently announced actions to reform the economy. Paris is facing mounting pressure from its European partners to slash its total public deficit -- which stood at 1.2 trillion euros at end 2007 -- as it prepares to take over the six-month rotating EU presidency. While all 15 eurozone countries committed last year to balancing their books by 2010, French President Nicolas Sarkozy has acknowledged that France might not be able to do so. Last week, the French leader said that France expected to balance its budget instead by 2012, mostly through staff cuts in the public sector.[17] The French budget adopted last December shied away from deep cuts, despite warnings that the state was effectively bankrupt. Paris will probably also not be able to count on a strong economy pumping bumper revenues into the state coffers, with the commission cutting its growth estimate for the French economy to 1.6 percent in 2008 from 1.7 percent previously. France has long struggled to meet EU public sector deficit rules but in the past could count on company from Germany in its bouts of rule-breaking. Germany has since returned to budget orthodoxy and has even balanced its books, leaving France with few allies to provide support on the deficit front. All eurozone countries are forecast to have deficits under the 3.0 percent limit this and next year.[17]
BRUSSELS (AFP) — France may need an early warning on its public finances, the European Commission warned Monday, predicting that the French deficit was slipping dangerously towards an EU limit. The deterioration in its public accounts could put Paris on a collision course with the Commission as France prepares for its much-anticipated presidency of the European Union starting in July. France's public deficit is set to rise higher than the government has predicted, hitting 2.9 percent of grosss domestic product (GDP) this year, the commission warned in its spring Economic Forecast.[17] "We are facing a very challenging time regarding inflation," EU Economic and Monetary Affairs Commissioner Joaquin Almunia told reporters in Brussels, describing soaring consumer prices as a "major problem." Despite the sharp upward revision to inflation, the European Union's executive arm only trimmed its eurozone growth estimate in its spring Economic Forecast to 1.7 percent from its last forecast of 1.8 percent in February.[2] "Economic growth is moderating in the European Union (EU) and euro area and the current, imported inflationary pressures are a matter of concern," said Joaquin Almunia, EU Economic and Monetary Affairs Commissioner.[3]
The market has so far expected 32.50, according to a Reuters poll. EU Monetary Affairs Commissioner Joaquin Almunia, who will draft the report on Slovakia, declined to comment on Slovakia's euro bid but reiterated the country of 5.4 million people should cut its budget deficit more, considering its fast economic growth. "We consider among other things, the fiscal consolidation should be more ambitious in Slovakia to help the authorities fight inflation more successfully," he told a news conference. Analysts and politicians have said Slovakia's uncertain inflation outlook is its only obstacle to adopting the currency now shared by 15 nations.[18] The warning by EU Monetary and Economic Affairs Commissioner Joaquin Almunia came ahead of an expected May 7 ruling by European authorities on whether Slovakia is ready to become the eurozone's 16th country. In the latest indicator, a European Commission economic outlook Monday said Slovakia's average inflation will spike to 3.8 per cent this year from 1.9 per cent in 2007, but retreat to 3.2 per cent in 2009.[19] The economy of the eurozone grew by 2.6% last year. "The moderation in growth results from the persisting turmoil in the financial markets, the marked slowdown in the United States and soaring commodity prices, all of which are taking their toll on global activity," the Commission said on Monday. The EU Economic and Monetary Commissioner Joaquin Almunia said that while Europe would not head into a recession, he warned that if inflation spiraled it would choke growth. "Inflation has become a major problem for all of us," he told reporters Monday, adding it was important to avoid anything, including wage hikes, that could lead to further price rises.[13]
The EU executive insisted that Europe is resilient and still far from recession with "no firm signs of a credit squeeze" -- even though it said global trade is slowing markedly and the U.S. is on the brink of a major recession that would hurt major exporters. It warned that a possible inflation spiral and any deeper impact on the economy from a banking crisis would see growth choked back further. The EU is predicting that inflation in the euro economy would rise to an average 3.2 percent this year from 2.1 percent last year -- far above the European Central Bank's recommended guideline of just under 2 percent.[20] Slovakia The Spring Forecast of the EC was eagerly awaited by the markets especially because Slovakia is planning euro adoption in 2009. Analysts have previously been concerned about the sustainability of Slovakia's inflation path, but the fresh figures delivered good news as they foreshadow a moderation of inflation pressure. According to the EC's projection, Slovakia's harmonised consumer price index will come in at 3.8% this year and drop to 3.2% in 2009. This makes the country's accession to the euro zone even more probable. The EU's finance ministers will have the final say on Slovakia's euro adoption plan in June this year. Hungary The EU executive raised its inflation forecast upward and its GDP projection downward for Hungary. According to the updated prognosis, Hungary's economy will grow by 1.9% yr/yr this year and GDP growth will tick up to 3.2% in 2009.[21] "Investment growth is weakening due to a cooling-off of overvalued housing markets and the cyclical slowdown. Private consumption growth is set to slow with employment and real wage growth decelerating this year and consumer confidence in steady decline." The pound closed in on the $2-mark yesterday, rising more than half a cent to $1.9948 amid expectations that the Federal Reserve is set to cut its interest rates again. The UK is slated to have a budget deficit of 3.3pc of GDP this year and the next, bigger than other European nations except Hungary and Finland. EU members must keep their budget deficit below 3pc of GDP. The Chancellor had forecast the deficit would only reach 2.9pc of GDP, but the EU's growth assumptions mean it will be higher.[22] Overall the data leads Oster to suggest the Australian economy may be slowing faster than had been expected, with clear signs the increases in interest rates are impacting on rate sensitive sectors of the econony and on the consumer. While there are no changes to his forecasts of GDP growth of 2.75% both this year and in 2009 Oster points out the risk now appears to be to the downside. Stronger commodity prices will continue to boost Australia's terms of trade and this plus the combination of tax cuts and a stronger agricultural sector should prevent any hard landing for the Australian economy, though domestic demand growth should slow from more than 5% last year to closer to 3.5% this year and a little less than that in 2009 on the bank's numbers. Globally the bank's forecasts are unchanged, with forecast GDP growth of 3.5% this year and 3.75% in 2009, which Oster notes implies a period of sub-trend growth rather than a global recession. The U.S. won't help given the bank is forecasting just 1.25% GDP growth this year and no strong growth until the second half of 2009, which means further rates cuts of as much as 50 basis points are likely by mid-year. While the UK and Europe won't be immune to any slowdown the bank sees modest improvement in growth in both regions in 2009, while slightly lower but still strong growth from China and India support the overall global growth outlook.[23] Consumer confidence in Germany rose against economists' expectations today and inflation slowed across the five German states that have reported April data. Growth in the French economy will slow to 1.4 percent in 2009 from 1.6 percent this year, while the U.K. economy will expand 1.6 percent after 1.7 percent. ECB policy makers said that the inflation pressures stemming from the rise in global oil and food prices preclude a cut in borrowing costs after the governing council left its benchmark rate at 4 percent this month. "We considered that was the best policy to prevent all this inflation imported from outside being passed on and producing second-round effects,'' Bank of Spain governor Miguel Angel Fernandez Ordonez said last week.[24] Inflation is one of Europe's biggest worries, sapping household spending as oil prices race to new highs and food prices soar on higher world demand. That has handuffed the central bank as far as rate cuts, which could provide a much needed boost to the economy. Almunia said it was crucial to avoid anything — such as large wage hikes — that would trigger further price rises and put severe pressure on the poorest and most vulnerable people. "Inflation has become a major problem for all of us," he told reporters. "With the present level of oil prices above $100 per barrel and with the high increase in food and other commodity prices we are suffering a very strong inflationary shock with. very strong consequences on our consumers and on the functioning of our economies," he said.[12] European Economic Commissioner Joaquin Almunia announced the new 2008 inflation predictions in Brussels, revising previous predictions upwards from 2.6 percent. "The biggest changes in our forecast when we compare these figures with the previous ones regards inflation for 2008 for well-known reasons - oil price increases, commodity price increases, food price increases," said Joaquin Almunia.[25] BRUSSELS (AFP) — The European Commission on Monday hiked its 2008 eurozone inflation forecast to 3.2 percent from 2.6 previously in the face of record oil and food prices but predicted that growth would suffer only slightly.[2] Brussels, Belgium (AHN)-The European Commission increased its forecast for this year's euro zone inflation to 3.2 percent from 2.6 percent amid escalating prices of food and fuel.[26] BRUSSELS (Thomson Financial) - The European Commission forecast a deterioration in the outlook for public finances in the euro zone, particularly France. The commission is now expecting a deficit for the bloc as a whole of 1.0 percent of GDP this year rather than the 0.9 percent predicted in its autumn forecasts published on Nov. 9.[27] PARIS (Thomson Financial) - The French government is keeping its forecasts for GDP growth and public sector deficits for both 2008 and 2009, despite Monday's downgrade of estimates by the European Commission, the finance ministry told Agence France-Presse. The Commission raised its 2008 deficit forecast for France to 2.9 percent of GDP from 2.6 percent and lifted the 2009 outlook to 3.0 percent from 2.7 percent.[28]
VIENNA (Thomson Financial) - The European Commission lowered its GDP growth forecast for Austria to 2.2 percent in 2008 and 1.8 percent in 2009 to reflect the influence a weakening external environment is likely to have on the country's economy.[29]
BRUSSELS - European Union forecasts that Turkey's economic growth would be around 4.7 percent in 2009, up from 4.3 percent of growth expectations in 2008. European Commission's spring 2008 report on economic forecast said, "due to its sizeable financing needs, Turkey may be more vulnerable to the current financial turbulence than most EU-Member States or other candidate countries."[30] Growth in the European Union is expected to ease to 2% in 2008 and 1.8% in 2009 from 2.8% in 2007 (1.7% and 1.5% in the euro area from 2.6% in 2007), according to the Commission's spring economic forecast released on Monday. The moderation in growth results from the persisting turmoil in the financial markets, the marked slowdown in the United States and soaring commodity prices, all of which are taking their toll on global activity.[21] The final results for 2007 were 2.8% for the EU and 2.6% for the euro area. With regard to the EU-27, Slovakia's growth is projected to be the biggest (7%) and Italy is to come in last (0.5%) this year. External shocks are taking their toll. The weaker economic outlook follows from continued distress in the financial markets, a marked slowdown in the U.S. - which the Commission expects to grow 0.9% this year and 0.7% in 2009 versus 2.2% in 2007 - soaring commodity prices and a resulting cooling of global growth. "The Commission's baseline scenario assumes that uncertainty about the size and location of credit losses will prevail until the end of this year, before gradually petering out during the first half of 2009.[21] In the 27-nation EU, the Commission said economic growth would reach 2.0 percent in 2008 and 1.8 percent in 2009, down from 2.8 percent last year. The financial turmoil, which erupted last summer, is proving deeper, wider and longer-lasting, while the downturn in the U.S. looks set to be more pronounced and protracted than previously assumed, the Commission said in its spring forecast. The Commission's baseline scenario assumed that uncertainty about the size and location of credit losses, which made banks reluctant to lend, would prevail until the end of this year, before gradually petering out during the first half of 2009.[3] The Commission also forecast Slovakia would have the highest economic growth rate of the EU's 27 nations, with gross domestic product expected to expand 7.0 percent in 2008 and 6.2 percent in 2009, compared with 10.4 percent last year.[18]
Brussels, April 28 - Slovakia's economic growth will decelerate to 7 percent in 2008 (from 10.4 percent in 2007), and will further slow to 6.25 percent in 2009, according to the spring economic forecast published by the European Commission on Monday.[31]
Analysts said the forecasts also showed that figure was below the target likely to be set according to the Maastricht criteria for joining the euro zone. 'This makes it very likely that the commission's report will be favourable and will recommend Slovakia to be allowed to join the Eurozone,' said Goldman Sachs (nyse: GS - news - people ) economist Istvan Zsoldos. The commission is due to give an initial verdict on Slovakia's efforts to meet euro criteria next month, but markets expect the European Central Bank will also maintain that there are concerns over its ability to keep price growth under control after adoption. The country's bid is seen as a key test case for its bigger neighbours Poland and the Czech Republic's prospects of adopting the single currency some time in the next decade. Zsoldos said he also expected Slovakia's central bank and the ECB to revise up the crown's central parity against the euro within the next few days.[32] By country, the commission raised Germany's 2008 growth outlook slightly to 1.8 percent from 1.6 percent, but cut the 2009 forecast to 1.5 percent from 2.2 percent. France is now expected to post growth of 1.6 percent this year and 1.4 percent in 2009 rather than the commission's previous forecasts of 1.7 percent and 1.8 percent respectively. Italy had its 2008 growth forecast cut to 0.5 percent from 0.7 percent and its 2009 outlook halved to 0.8 percent from 1.6 percent. Outside the euro zone, the UK's growth forecast was cut to 1.7 percent from 2.2 percent for this year and to 1.6 percent from 2.5 percent for 2009.[7] Average inflation in EU, pegged at just above the 2 percent mark since 2004, was predicted to peak in 2008 to 3.6 percent in the EU and 3.2 percent in the eurozone before returning to more traditional levels in 2009. The EU's executive arm also cut growth forecasts by about half a percentage point to 2 percent this year and 1.8 percent in 2009.[26] 'Nonetheless, the balance of risks for the growth outlook continues to be tilted to the downside, especially for 2009, while the risks for inflation are somewhat on the upside,' it said. The commission based its forecasts on assumptions of an average euro level of $1.55 in 2008 and $1.57 in 2009. It is assuming short-term interest rates of 4.3 percent in 2008 and 3.8 percent in 2009, with long-term rates of 4.0 percent for both years. It said the tightening in credit conditions has been partly offset by the decline in benchmark interest rates in recent months. 'This reflects among other things the weakened growth outlook, especially for the U.S., the flight to quality and a shift in expectations towards a looser monetary policy,' it said.[7] For Slovakia, which has formally applied to join the euro zone at the start of 2009, the commission is forecasting inflation of 3.8 percent for 2008 and 3.2 percent for 2009. Almunia has said the country's membership was not yet a done deal and that the commission will closely watch its inflation figures. On Europe-wide inflation, Almunia said the area is'suffering a very strong inflationary shock,' he said, reiterating that this would have 'very different consequences' for Europe to other areas. 'I hope that we will be able to avoid second round effects,' he added, noting that he is 'optimistic' this will happen. 'The most difficult issue is that we have to face three shock at the same time,' he said, referring to the U.S. slowdown, the global credit crisis and the rising inflation rate. Asked if the commission would revise its forecasts down again, Almunia said 'these are uncertain times. to forecast is not impossible, but it is a dangerous activity'.[7] BRATISLAVA, April 28 (Reuters) - The European Commission forecast on Monday that Slovakia's annual inflation rate would peak in the third quarter of 2008 and ease next year, boding well for the country's 2009 euro zone entry bid.[33] BRUSSELS (Thomson Financial) - The European Commission trimmed its 2008 and 2009 growth forecasts for the euro zone and hiked its inflation outlook for the bloc.[7] BRUSSELS, April 28 (Xinhua) -- The European Commission on Monday sharply raised its inflation forecast for the eurozone this year while predicting slightly lower growth for the 15-nation bloc sharing the same currency.[3]
BRUSSELS, April 22 (Xinhua) -- Imports from developing countries to the European Union (EU) have continued to rise, the European Commission said on Tuesday. BRUSSELS, March 26 (Xinhua) -- The eurozone economy is facing stronger headwinds from financial turmoil, a U.S. slowdown and surging oil prices, the European Commission said on Wednesday, while maintaining its previous forecast.[3] Alistair Darling was facing major embarrassment last night after the European Union downgraded its economic forecast for the UK and launched an inquiry into the state of public finances. The Commission announced a probe after it confirmed the UK's budget deficit will be bigger than the EU limit this year and next.[22] The Commission said that the Treasury was set to borrow 3.3 per cent of national income (GDP) in the present 2008-09 financial year and the next, twice breaching the 3 per cent ceiling prescribed under the Maastricht Treaty. The average deficit for the 27 European Union nations this year is, by contrast, set to be only 1.2 per cent of GDP. Brussels uses a different method of estimating borrowing levels laid down under Maastricht rules, but the Treasury projects that on this basis the UK's 2008-09 deficit will be 3.2 per cent, rather than the expected 2.9 per cent it expects on Britain's own standard accounting method.[16] Officials in Brussels said that despite the slowdown, the EU economy remained "in a relatively good position to weather the global headwinds" thanks to sound fundamentals. Both its average public deficit and current account position, for instance, were below 1 per cent of GDP in 2007, while the unemployment rate was expected to drop from 7.1 per cent last year to 6.8 per cent this year.[6]
"Whilst our economies have proved resilient to the external shocks so far, and we expect continued, albeit slower, job creation, we need to stick to sound macro-economic policies and carefully avoid starting an inflation spiral that would particularly affect low income families," Almunia said. The EU's latest figures, which were broadly in line with its February interim forecasts, were not entirely negative, however. For instance, the EU's largest economy, Germany, was predicted to grow by 1.8 per cent this year and by 1.5 per cent the next. This is more optimistic than the German government's own forecasts of 1.7 and 1.2 percent respectively.[6] Spain is forecast to grow by 2.2 and 1.8 per cent. Brussels also forecast an EU inflation rate of 3.6 per cent this year, falling to 2.4 per cent in 2009. Eurozone inflation was forecast at 3.2 per cent this year ''' the highest since the euro's launch in 1999 ''' and 2.2 per cent in 2009.[10] The EU report on Monday showed the trend for Slovakia running well above current eurozone countries, where average inflation was pegged at 3.2 per cent in 2008. Analysts said the forecast of easing inflation after this year's expected spike could work in Slovakia's favour.[19]
While the UK and Denmark have an exemption from the euro, the remaining countries of the 27-nation EU have a legal obligation to join. The 5.3-strong million Slovakia officially applied for approval of its euro entry in early April, after several years of adopting concrete measures to meet the planned 2009 entry. In its draft report, the commission says "the budget deficit in Slovakia has seen a credible and sustainable reduction to below 3 percent of GDP," and its average inflation rate "is well below the reference value, and it is likely to remain below the reference value in the months ahead, albeit with a narrowing margin."[34] "In 2009, economic activity is expected to remain subdued, under the influence of a still unfavorable external environment." Slower growth should contribute to a rise in Italys budget deficit, which the commission sees at 2.3 percent of GDP in 2008, up from 1.9 percent of GDP in 2007, but below its 3 percent of GDP ceiling. Italys debt is expected to edge lower to 103.2 percent of GDP this year from 104 percent of GDP in 2007.[35] According to the European Commission's spring economic forecasts, France's budget deficit to gross domestic product (GDP) ratio will reach the upper limit of 3.0 per cent in 2009, having risen to 2.9 per cent in 2008 and by a higher-than-anticipated 2.7 per cent a year ago.[36] Christine Lagarde, French finance minister, expressed scepticism about the revised forecasts for France, saying the outlook for 2009 growth was "very, very pessimistic". Paris would not revise its forecast of about 2.5 per cent. The Commission is predicting French growth of 1.6 this year and 1.4 per cent in 2009. German growth is expected to be 1.8 per cent this year and 1.5 per cent next year while the figures for the UK will be 1.7 and 1.6 per cent respectively. The sharpest slowdown is foreseen in Italy, with growth of 0.5 per cent this year and 0.8 per cent in 2009.[10]
Monetary Affairs Commissioner Joaquin Almunia said: "We will launch again an excessive deficit procedure against the UK." The Commission said the UK economy will grow by only 1.7pc this year and 1.6pc the next, well below the Chancellor's Budget forecasts of 2pc and 2.25pc respectively. The EU said its overall economy would grow by 2pc this year and 1.8pc in 2009, warning it "will not escape unscathed".[22] In a news conference following the forecasts, EU economic and monetary affairs commissioner Joaquin Almunia said France had the 'most worrying deficit in the euro zone' along with the United Kingdom, Hungary and Romania. He added that there is a risk the French government will not keep to its predictions on deficit and that failure to strictly control its budget 'would lead to a possible excessive deficit in France'. 'I think this is a clear case where we could use the instrument we have at our disposal to deal with the situation,' he added. Almunia also said he would introduce disciplinary measures against the United Kingdom. 'We will launch again a report to start an excessive deficit procedure,' he said. 'I intend to present this report for the adoption of the college (of EU commissioners) on June 11,' he said.[27] In a news conference after the forecasts, EU economic and monetary affairs commissioner Joaquin Almunia said France had the 'most worrying deficit in the euro zone'. He said there is a risk the French government will not keep to its deficit predictions and that failure to strictly control its budget 'would lead to a possible excessive deficit in France'. 'I think this is a clear case where we could use the instrument we have at our disposal to deal with the situation,' he added. Lagarde added that Brussels seems 'not to have taken account of the effects of the law on economic modernization' that she presented in a cabinet meeting Monday, and 'took very little account of the RGPP,' a plan to reform public policy by which the government aims to save several billion euros. Lagarde added that she is 'calm' concerning a possible official warning from the EU over the French deficit.[28]
Next year, the shortfall in the French public accounts would widen to 3.0 percent -- the maximum allowed under EU rules. In light of those forecasts, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said the situation "is a clear case for using the instruments that are at hand in such cases," that is, an early warning.[17]
"We are facing a very challenging time regarding inflation," European Union (EU) Economic and Monetary Affairs Commissioner Joaquin Almunia said.[26]
In a twice-yearly forecast, the European Union executive said Slovakia's annual inflation would fall to 3.2 percent in 2009 on the EU measure (HICP), after peaking at 3.8 percent in 2008. This compared with 1.9 percent last year.[18] BRUSSELS, April 28 (Reuters) - Slovak inflation will ease in 2009 after hitting a peak this year, the European Union forecast on Monday, cementing expections in the country that it will be allowed to join the euro zone next January.[18]
Austria's inflation rate is likely to rise to 3.0 percent in 2008 before declining to 1.9 percent in 2009, according to the new forecast published by the European Union's executive arm.[29]
The crown gained almost half a percent against the euro before settling to 32.25, after the European Commission's newest forecasts showed it believed average annual inflation would fall to 3.2 percent next year.[32] Annual inflation in the eurozone would increase to 3.2 percent in 2008 amid soaring oil and food prices, up from the 2.6 percent previously expected by the Commission in February and more than one percentage point higher than the 2.1 percent in 2007. "The sharp increase reflected a combination of soaring oil and food prices and the fading of favorable base effects," the Commission said in its spring economic forecast.[3] The commission attributed the expected moderation in growth to persisting turmoil in the financial markets, the marked slowdown in the U.S. and soaring commodity prices. On the inflation front, it hiked its 2008 inflation forecast to 3.2 percent from the 2.6 percent expected in February.[7]
EU GDP rose by 2.8 percent in 2007, while euro area GDP increased by 2.6 percent in the same year. It forecasts that the second quarter would prove to be the weakest point of the current slowdown, with quarterly growth of only 0.2 percent before the economy recovers anew.[26] Three percent is the maximum deficit allowed under the EU stability and growth pact. The commission also cut its GDP forecasts for France, lowering 2008's outlook to 1.6 percent from 1.7 percent and 2009 to 1.4 percent from 1.8 percent.[28] The euro zone is forecast to post a 2009 deficit of 1.1 percent of GDP compared with the previous forecast of 0.8 percent. France had its 2008 deficit forecast raised to 2.9 percent of GDP from 2.6 and its 2009 outlook upped to the stability and growth pact threshold of 3.0 percent from 2.7 percent.[27]
The Commission had previously pegged Austria's GDP growth at 2.7 percent for 2008 and 2.4 percent in 2009, the Austrian press agency APA reported. 'The still buoyant activity at the beginning of 2008 is set to gradually slow down over the course of the year,' the Commission wrote as part of its annual Spring economic forecast.[29] Economists expect 1.5 percent. Business confidence in Germany, the world's biggest exporter, dropped to its lowest level in more than two years in April while investor confidence fell to close to a 15-year low. Germany's growth rate will decline to 1.8 percent this year and 1.5 percent in 2009, the commission forecast today, after 2.5 percent expansion last year.[24] The commission's forecast for euro-region growth next year is more pessimist than the 1.7 percent median estimate in a Bloomberg News survey of 21 economists. The commission forecast a 1.7 percent expansion this year, compared with the 1.8 percent expansion forecast in February.[24]
The annual rate in the euro zone hit 3.6% in March, the highest since the euro was launched in 1999. The commission report was not all doom and gloom, as it raised its growth forecast for Germany this year from 1.6% to 1.8%.[4]
Not all was doom and gloom in the commission's report, with regional economic powerhouse Germany expected to perform better than the last time Brussels made forecasts in February. Europe's biggest economy was forecast to grow 1.8 percent this year, rather than the 1.6 percent the commission predicted in February.[2] By comparison, the commission said the 15-country euro zone economy is expected to grow 1.7 percent down slightly from Februarys forecast of 1.8 percent. It has trimmed the Italian forecast from 0.7 percent in February and 1.4 percent in November.[35]
The EU economy is holding up relatively well thanks to sound fundamentals and is expected to create 3 million new jobs in 2008-2009 on top of the 7.5 million in 2006-2007. Consumer price inflation is expected to surge temporarily to 3.6% this year in the EU against 2.4% in 2007 due to soaring energy and food prices, before coming down to an expected 2.4% in 2009 ( equivalent figures for euro area are 3.2% and 2.2% versus 2.1% in 2007), the EU executive said.[21] The fact that we have not seen much of an effect so far could imply either than transmission lags are longer than expected or that the resilience has improved further than we think in the EU," the EC said. making inflationary pressures a clear worry Headline inflation increased significantly since the autumn to reach 3.8% in March, in annual terms, in the EU (3.6% in the euro area). This reflects a sharp increase in global energy and food prices partly cushioned by the stronger euro. In view of this, the Commission is now forecasting average inflation this year at 3.6% in the EU and 3.2% in the euro area.[21]
"Inflation is going up to 3.6 percent in the EU - 3.2 percent in the euro area. Prices we hope will start to decelerate in the second quarter of this year."[25]
Pushed up by record-high oil prices and rising food prices, eurozone inflation has doubled since August 2007, reaching 3.6 percent in March, the highest level in 12 years and well above the two-percent ceiling preferred by the European Central Bank to maintain price stability.[3] Record commodities prices drove the 12-month eurozone inflation to hit 3.6 percent in March, the highest since the 1999 launch of the shared currency and well above the European Central Bank's comfort level of just under two percent.[26]
Some analysts said the forecast was narrowly within the target range for showing the European Commission and the European Central Bank (ECB) that Slovakia's inflation will stay low in future - the key remaining issue. Almunia urged Slovakia's government to tighten spending, which he said was a homegrown reason for rising prices - in addition to the global price shock, a reference to food and energy prices. 'We have said several times to Slovak authorities that. the fiscal stance of the Slovakian policies is not as ambitious as desirable,' he told reporters.[19] The European Commission warned that it expects inflation within the 15 nation euro zone to rise to 3.2% for the year. This adds to pressure on the European Central Bank to refrain from a confidence-boosting interest-rate cut.[13] Inflation hit a record high of 3.6% year-on-year in March and the Commission now expects it to be 3.2% in the whole of 2008 from 2.1% last year and to ease to 2.2% in 2009. The European Central Bank is predicting inflation at 2.9% this year and 2.1% in 2009. ECB Chairman Jean-Claude Trichet and his policymakers have said that the best way they can keep inflation contained is by leaving interest rates unchanged for now.[5]
Unlike some other major central banks, the Frankfurt-based ECB has so far opted not to cut interest rates in the face of weakening growth, concentrating instead on keeping a lid on inflation. In Vienna, ECB chief Jean-Claude Trichet described the current economic environment as "very challenging" but voiced confidence the ECB "will meet those challenges thanks to its stability-orientated monetary policy strategy."[2]
Today's intraday high was the pair's strongest showing since 29 February. Most traders expect Bank of Japan's Policy Board will keep the overnight call rate unchanged at 0.50% on Wednesday, reduce its GDP growth forecast for the fiscal year to March 2009, and increase its inflation forecast.[37] A weaker-than-expected German print could pressure the single currency. The European Commission reduced its EMU-15 2008 GDP growth forecast to 1.7% from its previous forecast of 1.8% and now sees 2009 GDP growth around 1.5%. The EC also upped its 2008 inflation forecast to 3.2% from the current 2.6% and sees inflation around 2.2% in 2009.[37] Almunia added that appreciation of the euro is linked to narrowing the gap between import and export growth. He was speaking at a news conference following the European Commission's economic forecasts.[38] BRUSSELS, April 28 (Reuters) - The following are comments by European Monetary Affairs Commissioner Joaquin Almunia at a news conference held on Monday after the European Commission issued its spring economic forecasts.[39] Brussels, April 28 - Presenting the spring economic prognoses of the European Commission (EC) on Monday, European Commissioner responsible for Economic and Monetary Affairs Joaquin Almunia refused to comment on whether Slovakia meets the Maastricht criteria necessary for the country's accession to the Eurozone.[40]
BRUSSELS (Thomson Financial) - European economic and monetary affairs commissioner Joaquin Almunia said, according to International Monetary Fund (IMF) tests, the euro is over-valued when compared to other currencies. 'If you ask all those who in the work of preparing estimates of (foreign exchange) equilibrium, most of them, including the IMF. say that the euro area exchange rate, now, both in real and effective exchange rate and bilateral tests with some other currencies reflects an overvalued euro,' he said.[38] 'Economic growth is moderating in the EU and euro area and the current, imported inflationary pressures are a matter of concern,' EU Economic and Monetary Affairs Commissioner Joaquin Almunia said.[4]
High inflation fueled by soaring energy and food prices is making it harder for Europe to weather trouble in the global economy and would hurt people on lower incomes, EU Economic and Monetary Commissioner Joaquin Almunia said.[20] "We are facing a very challenging time, particularly concerning inflation,'' EU Commissioner for Economic and Monetary Affairs, Joaquin Almunia, said today in Brussels.[24]
Joaquin Almunia, the EU's monetary affairs commissioner, said Britain's projected breach of the Commission's maximum allowed budget deficit would automatically trigger EU disciplinary procedures. "We will start the excessive deficit procedure," he said. "I intend to present this report for adoption on 11 June."[9]
Joaquín Almunia, the European Economics Affairs Commissioner, said that Brussels would begin "excessive deficit procedures" to seek a formal rebuke for Mr Darling and Gordon Brown at Ecofin, the EU's council of finance ministers. "The message for the UK with these forecasts is very clear," Mr Almunia said.[16]
WARSAW (Thomson Financial) - Slovakia's crown currency rose Monday after EU economic forecasts showed it is on track to meet goals on inflation needed to smooth the road to adopting the euro from the start of next year.[32] The Commission's economic forecast published today projects economic growth at 2.0% in 2008 and 1.8% in 2009 in the EU (1.7% and 1.5% for the euro area). This is 0.5 percentage point lower than predicted in the autumn forecasts.[21] Growth in the 15-nation eurozone would fall to 1.5 per cent from 1.7 per cent. In its November forecasts, the Commission predicted EU growth of 2.4 per cent in 2008 and 2009 and in the eurozone 2.2 per cent and 2.1 per cent respectively.[10] Gross domestic product (GDP) growth forecasts for the 15-member euro area were similarly cut to 1.7 and 1.5 per cent respectively.[6] Howard Archer, of Global Insight, said: "We forecast GDP growth will be limited to 1.6 per cent in 2008 and 1.4 per cent for 2009."[9]
Almunia also said the Commission on May 7 would close a probe for Slovakia's past overshooting the limit on budget deficits for countries that want to use the euro - 3 per cent of gross domestic product (GDP).[19] Slower growth will see public finances deteriorate across the single currency area, the commission said. The aggregate budget deficit for the region will widen to 1.1 percent of gross domestic product after 1 percent this year.[24] On Ireland, the commission said the picture was heavily influenced by the construction slowdown, and the extent and duration of the downturn remained uncertain. It expected the unemployment rate to rise to 5.6% this year and 5.8% next year, but said inflation would drop in 2009 as the effect of higher mortgage payments receded. The commission said weaker growth and tax revenues meant the Government deficit could be worse than projected this year, and a projected slowdown in Government spending in 2009 might not be enough to stop this worsening in 2009.[4] Investment growth is weakening due to a cooling-off of overvalued housing markets and the cyclical slowdown. Private consumption growth is also set to slow with employment and real wage growth decelerating this year and consumer confidence in steady decline. Improvements in the labour market and public finances come to a halt Following on the strong improvement in 2006-2007 momentum, the labour market is now softening and employment growth is expected to be halved this year, down from 1.7% in 2007 to 0.8% this year and 0.5% next. The unemployment rate should bottom out at 6.8% in the EU this year (7.2% in the euro area). Despite the easing in the labour market situation, wage growth is expected to accelerate from 2.9% in 2007 to 3.8% this year, temporarily boosted by some catching-up measures in e.g. Germany, before decelerating again to 3.5% next year.[21]
Brussels also said that it expected that British employment growth would slow "to almost zero", while the unemployment rate was tipped to increase slightly over the next two years. Brussels coupled its questioning of the Chancellor's economic forecasts with an attack on his financial management, singling Britain out as one of the bad boys of Europe.[16] Domestic demand may remain a key driver of growth, while incomes from external demand should begin falling following the period covered by the forecast. The country's unemployment is expected to fall further from 11 percent in 2007 to 9.8 percent this year and to 9.3 percent in 2008, as export-led manufacturing capacities are expected to create more jobs.[31] Germany's deficit is now expected to be 0.5 percent of GDP for 2008 rather than 0.1 percent, and 0.2 percent for 2009 instead of a surplus of 0.2 percent. Italy's deficit forecast was unchanged at 2.3 percent of GDP for this year, but increased slightly to 2.4 percent from 2.3 percent for 2009.[27] "We will ask the Portuguese authorities when preparing the budget for 2009 to be more ambitious, because looking at the forecast for 2009, we are estimating a deficit of 2.6 percent. It's not at the reference value, but it is a deficit-increasing trend that in the case of Portugal should be avoided and the fiscal consolidation should be continued." "I don't discuss now through which type of measures this should be achieved but it is clear that we need to ask the Portuguese authorities for further decisions to continue the consolidation that so far has been extremely successful." "This important increase (in Slovakian inflation this year) indeed is due to general external shocks that all countries are suffering but is due also to some internal elements that need to be considered by the Slovakian authorities."[39] HCIP (Harmonised Consumer Price Inflation) fell in 2007 to 1.9 percent on the back of lower energy-price increases and the appreciation of the Slovak koruna. Last year's rapid rise in food and energy prices led to HICP growing at a gradually faster rate, which should peak in the third quarter of this year.[31] The European Union announced a sharp hike in inflation this year largely due to rising oil and food prices.[25] BRUSSELS -- European Union economies will continue to lose steam this year in the wake of the subprime-mortgage tumult in the U.S., the European Commission said.[41] BRUSSELS, March 31 (Xinhua) -- Economic confidence continued to decline in the eurozone but slightly rebounded across the whole European Union (EU) in March, European Commission figures showed Monday.[3] BRUSSELS, April 23 (Xinhua) -- Eurozone industrial new orders rose by 0.6 percent in February, compared with the previous month, the European Union (EU)'s statistics bureau Eurostat said Wednesday.[3] BRUSSELS, April 24 (Xinhua) -- European businesses remained cautiously optimistic about the economic future amid increasing uncertainties, according to a survey released on Thursday. BRUSSELS, March 12 (Xinhua) -- Financial turmoil will top the agenda when leaders from the European Union (EU) member states gather here for their annual spring summit later this week.[3]
Brussels - The European Union's top economic official Monday threatened to take action against France after latest estimates show the country risks breaching the eurozone's budget deficit limit next year.[36]
The increase in excise taxes in 2008 led to more cigarette hoarding than predicted in late 2009, which brought in higher-than-expected incomes. This alongside higher-than-expected GDP, growing employment and a lower level of co-funding of projects with the European Union than predicted brought the deficit down to 2.25 percent in 2007.[31] The European Union expects Italian labor productivity to increase by a mere 0.2 percent in 2008 and 2009.[35]
The first was advanced European economies, including the 15-nation euro zone, Denmark, Sweden and Britain. The second was emerging European economies, including Russia, Croatia, Albania, Turkey and Ukraine, among others. The agency said that the advanced European economies would see a decline in real growth to 1. 5 percent this year from 2. 8 percent in 2007. [14] The commission predicted that consumer prices growth would peak in the second quarter and cool down over the rest of the year and into 2009, bringing inflation in the euro zone down to 2.2% next year.[4] The forecast did not include the 12-month average inflation rate which is used to assess whether countries are fit to adopt the euro. It offered some reassurance about Slovakia's ability to keep price growth in check.[18] The report also forecasts that unemployment rate would be around 10 percent in 2008 and fall to 9.8 percent in 2009, adding that "as from mid-2008, inflationary pressures are expected to fall slowly. 12-month consumer price inflation is expected to fall below 8 percent by the end of 2008 and to 6 percent at the end of 2009."[30]
The commission predicted that consumer price rises would peak in the second quarter and cool down over the remainder of the year and into 2009, bringing inflation in the eurozone down to 2.2 percent next year.[2] The growth rate in the eurozone was 2.6 percent in 2007. "The moderation in growth results from the persisting turmoil in the financial markets, the marked slowdown in the United States and soaring commodity prices, all of which are taking their toll on global activity," the Commission said.[3]
For the whole of 2009, it forecast eurozone growth would slow to 1.5 percent while activity in the overall EU economy would ease to 1.8 percent.[2] Economic growth in the eurozone was expected to slow down further to 1.5 percent in 2009, according to the latest forecast.[3]
The fastest inflation since 1992 is preventing the ECB from cutting interest rates to support economic growth. "These things will have an impact on the economy over a long period of time,'' said Stephane Deo, chief European economist at UBS AG in London.[24] The U.S. central bank next meets to set interest rates on April 30. The pound rose 0.4 percent to 78.84 pence per euro after European Central Bank President Jean-Claude Trichet said this past week he's concerned the surge in the region's single currency may hurt the economy.[42] The European Commission's report piled pressure on the European Central Bank, which has remained consistently hawkish over interest rates. Because key commodities are priced in dollars, they have been rising against the U.S. currency as the greenback weakness on foreign exchange markets.[13]
European Central Bank sources have previously said the ECB is worried about Slovakia's inflation outlook. The ECB will also report on Slovakia's euro readiness on May 7, but its findings will not be binding under EU rules.[18] The forecast shows that inflation will exceed the 2.0% cap set the European Central Bank and that Slovakia is to meet the CPI criterion.[21]
"The European Commission forecasts are more-or-less in line with our prognosis," Sevcovic, who also heads the NBS's monetary policy department, told Reuters. "This confirms the view of the National Bank of Slovakia that Slovakia is able to meet the inflation (condition) in a sustainable way."[33]
"We did not come here with champagne and fireworks, but the European Commission's forecasts are a significant step towards meeting the goal of adopting the euro," Slovakia's leftist Prime Minister Robert Fico told a news conference. It later dipped to 32.245 at 1509 GMT. Fico said he would aim for the strongest possible switchover exchange rate. "My personal view is that the rate should be as favourable for the people as possible, that people would pay as few crowns for a euro as possible," he said. He said he expected the rate to be set in the first week of July.[18] Prime Minister Robert Fico said the numbers bolstered Slovakia's case for joining the euro. 'The European Commission's economic forecast confirms. that Slovakia is on a good path,' he said in Bratislava, the capital.[19]
"The forecast is set in a way that the report coming next week should say Slovakia is meeting all the criteria (for euro zone entry) and in a sustainable way." "These forecasts are positive news for Slovakia. The other report from the ECB will not be as positive, but this one from the Commission is more important and will probably outweigh it."[33]
The Commission said euro zone inflation was expected to leap to 3.2 percent before slowing to 2.2 percent in 2009.[18] The emerging economies' GDP would drop to 5. 5 percent from 6. 9 percent in 2007. In the euro zone, GDP is expected to be at 1. 4 percent this year and 1. 2 percent in 2009.[14]
Inflation in the 27-nation EU has also doubled from 1.9 percent in August 2007 to 3.8 percent in March 2008. Average inflation in the EU this year was expected to stay as high as 3.6 percent, up from 2.4 percent in 2007.[3] Under EU rules, a country wanting to join the euro must have inflation no higher than 1.5 percent percentage points above the average of the three EU members with the lowest inflation rates.[18]
"It's broadly positive, although the forecasts don't completely rule out a suprise decision in my view." "It's not such a clear cut case. (The Commission) still projected above three percent (inflation).[33] The breakeven rate is a gauge of market expectations of inflation. Further gains in gilts and the decline in the pound may be limited on speculation the Bank of England, which has cut rates three times since December, will delay lowering them further due to concern that price pressures are building. Andrew Sentance, one of two policy makers who voted against the 25 basis-point rate cut to 5 percent on April 10, this past week said the pound has fallen to a "competitive'' level and will stoke inflation. It is "difficult to gauge'' if the current benchmark rate is restrictive, Sentance said following a speech at the Confederation of British Industry in London in April 23.[42] More details of the survey have now been released and they show along with the decline in confidence a significant fall in business conditions, down six points to a reading of +13, an outcome the bank's group chief economist Alan Oster suggests is consistent with the slowing in demand growth to 3.5% experienced in the first quarter of the year. As demand growth fell so too did trading and profitability, the former falling 12 points to a reading of +17 and the latter down 11 points to a +8 reading, though employment wasn't so affected and fell only three points and remains relatively strong at a +11 reading. A further issue Oster notes is companies continue to have difficulties finding suitable labour, as more than 70% of companies confirming they were having trouble in this regard, an increase of more than 4%. This ties in with still high levels of capacity utilisation, which even after a 0.3% fall in the period remains high at almost 84%. Oster also notes retail price pressures continue to accelerate and this underscores an expectation inflation will stay at around 4% through 2008, leading him to suggest the Reserve Bank of Australia's bias remains to the upside with respect to rates in coming months.[23]
The European Central Bank has stuck to its guns by not cutting rates, but its received mounting pressure from rising inflation and little impact on prices.[13] The commission, the bloc's executive arm, also said that while euro-zone inflation may have peaked in March, it is expected to average well above the European Central Bank's preferred range.[41] European Central Bank member Liebscher hawkishly said policymakers must "do everything which is necessary to prevent any materialization of second-round effects and higher inflation rates."[37]
In a move which surprised economists Hungary's central bank decided on Monday to push interest rates up by 25 basis points to 8.25% on Monday, after inflation rose to 6.7% last month.[13]
At the moment Slovakia meets all the euro zone entry criteria on inflation, the budget deficit, public debt, long-term interest rates and currency stability.[18] 'Fiscal consolidation should be more ambitious so as to help the authorities fight inflation more successfully,' Almunia said. Slovakia would be the first euro member from the former Soviet bloc and has met key euro benchmarks, including those on current inflation and the public deficit. But questions remain about whether inflation will rise once the country adopts the euro.[19]
"We have several times warned Slovak authorities that in view of the inflation pressures and the rapid growth of the Slovak economy that creates problems from demand side, the Slovak fiscal policy isn't as ambitious as would be appropriate. That's why we think that, among other things, the fiscal consolidation in Slovakia should be more ambitious, so that inflation can be fought against more successfully," emphasised Almunia.[40] NEW DELHI: Even as the RBI reports 16 professional forecasters estimating the average rate of growth for the Indian economy for 2008-09 at 8.1%, rating agency Icra'''s forthcoming issue of Money & Finance puts the growth rate at a slower 7.8%. Its macroeconomic outlook expects inflation to hover above the acceptable threshold of 4-5%.[43] The EU executive insisted that Europe is resilient and far from recession, but warned that a possible inflation spiral and any deeper impact on the economy from a banking crisis would choke growth.[12] Europe is suffering from "a very strong inflationary shock" because prices in the euro zone economy have surged more than expected as growth slows down from a recent boom, the EU's top economy official said Monday.[20]
The moderation comes after five continuous years of high growth, starting 2003-04, when the economy recorded an average 8.8% GDP expansion, including the expected 8.9% last year. Per capita GDP growth averaged 7.2% over this period.[43] For the current fiscal year, Icra estimates that all sectors of the economy would post slower growth ''' agriculture by 2.5% (against its forecast of 3.4% for 2007-08), industry by 8.7% (8.8%)and services by 9.1% (10.8%). It further points out that although the share of agriculture in GDP has declined to about 18%, it may not be correct to assume that the growth would be sustained even if the farm sector output remained flat.[43]
The economy expanded 2.5 percent from a year earlier. The International Monetary Fund earlier this month forecast the U.K. economy to expand 1.6 percent this year, the least since 1992, when Britain had its last recession.[42]
Looking ahead to 2009, the commission predicted that economic activity would pick up towards the end of the year to about 2.0 percent in the eurozone at an annualised rate. [2] Looking ahead to 2009, the commission predicted that economic activity would pick up towards the end of the year to about 2%, but the average growth rate would slow to 1.5%.[4]
"The growth rate will be not catastrophic, but weak.'' The euro extended its gains against the dollar following the release of the report, rising as much as 0.53 percent. It traded up 0.4 percent at $1.5664 at 1:10 p.m. Brussels time.[24] "The growth rate will be not catastrophic, but weak." The euro extended its gains against the dollar following the release of the report, rising as much as 0.53 per cent. It traded up 0.4 per cent at $1.5664 at 2:10pm.[11]
This is sharply lower than its previous November projection of 2.5 per cent growth and far below Mr Darling's hopes for GDP to expand by 2.25 to 2.75 per cent.[16]
Average inflation, which had remained just above the 2 per cent mark since 2004, was predicted to peak in 2008 to 3.6 per cent in the EU and 3.2 per cent in the eurozone before returning to more traditional levels in 2009.[6] After peaking in the second quarter of 2008 in the EU, inflation is nevertheless expected to come down to lower levels to 2.4% in 2009 on average (2.2% in the euro area).[21] After recording the best result since 2000 at 0.9% of GDP (0.6% in the euro area), the average public deficit is expected to increase again in 2008 to 1.2% of GDP in the EU (1.0% in the euro area) due to more moderate activity in general and tax cuts in some countries.[21] The balance of trade is expected to worsen to a record $120 billion or 9% of the GDP due to the sharp rise in oil import bill. Therefore, the current account deficit, despite the expected increase in net invisibles, too would worsen to $28.3 billion or 2.1% of the GDP. The current account deficit position would be worse if the average price of crude oil for the year rules above $110 a barrel; at $120 a barrel, the current account deficit ceteris paribus would increase to $35.1 billion or 2.6% of GDP, according to the bulletin.[43]
"With the present level of oil prices above 100 dollars per barrel and with the high increase in food and other commodity prices, we are suffering a very strong inflationary shock," Almunia said. "Inflation is distorting our capacity to weather in the best conditions possible the financial turmoil and inflation is. a big punishment on the weakest sectors of our society," he added.[2] High prices for food, oil and metals risks worsening inflation because the can leach into the production costs for other goods, the EU report said.[12] BRUSSELS, Belgium (AP) — Europe is suffering from "a very strong inflationary shock" with food prices soaring and the cost of oil hitting record highs, the EU's top economic official said Monday.[12] While oil prices flirt with records close to 120 dollars a barrel, the EU executive said futures contracts suggested food prices would rise 54 percent in the first half of 2008 before stabilising.[2]
The Commission said a surge in food and oil prices is dampening consumer demand and therefore growth. It has raised its price growth forecast.[5] Asked why the Commission's forecast for Spanish growth in 2009 was 0.5 percentage point below the Spanish government's forecast: Continued.[39]
"The European Commission forecasts confirm we are able to meet the inflation criterion in a sustainable way in the future," Finance Minister Jan Pociatek told reporters.[33] The commission's latest forecasts came amid news that German inflation subsided in April.[41]
For 2009, it is now expecting inflation of 2.2 percent rather than the 2.0 percent forecast in November.[7]
On inflation, Almunia pointed out that an increasing trend from 1.9 percent in 2007 to 3.8 percent in 2008 is expected, and subsequently 3.2 percent in 2009. Although the Spanish commissioner concedes that this increase is caused also by external influences that all countries face, in his opinion it also includes a consequence of certain internal phenomena.[40] Inflation is expected to rise further as traders run out of pre-stocked cigarette supplies. It should reach 3.8 percent in 2008 before falling to 3.2 percent in 2009.[31]
"There's speculation the Federal Reserve will soon pause and inflation will delay rate cuts in the U.K. But my view is that the worst is far from being over.'' The yield on the two-year gilt rose 20 basis points this past week to 4.55 percent by 5 p.m. yesterday in London.[42] The U.S. bond market has reacted to the potential rate cut and increases to inflation.[13]
The levels of inflation in Slovakia was previously regarded as the most sensitive area of the Slovak candidacy, with Brussels urging Bratislava until the last minute to make more lasting cuts in the budgetary deficit to prevent future inflation hikes.[34]
EU countries are not the only ones that face the dilemma of countering soaring inflation with the need to buoy a flagging economy by lowering interest rates. On Monday Iceland's statistics office said that inflation in April soared to 11.8%, its highest level since 1990.[13] Fiscal consolidation should be more ambitious so as to help the authorities fight inflation more successfully," Joaquin Almunia, the EU's economy commissioner said at a press conference on Monday (28 April).[34]
"Economic growth is moderating in the EU and euro area and the current, imported inflationary pressures are a matter of concern," said Almunia.[26] Households and enterprise balance sheets have improved markedly in recent years and the unemployment rates for the EU and euro area are the lowest in more than 15 years.[21]
The procedure is designed to cap budget deficits of EU members, but while fines can be imposed on countries that are members of the euro, there are no real sanctions for EU states outside the eurozone.[16] Based on the usual no-policy-change assumption (including as regards the tax code), the forecast projects a modest budget deficit improvement in 2009 to 3.6% of GDP, "thanks to a continued expenditure moderation in government consumption achieved by a series of structural reform measures to streamline the public sector".[21] For 2009, the EC assumes that not all of the planned further savings in government consumption (especially price subsidies and the public wage bill) and in subsidies on products will be achieved, since "it may be difficult to continue to contain spending". The forecast does not include any possible takeover from the debt of M'V, the state-owned railway company (around 1% of GDP), nor any additional capital injections to M'V. It also does not consider any consequence of the ongoing restructuring of M'V on the sectoral classification of the company's successor units.[21]
Yields move inversely to bond prices. Gilts pared losses yesterday after a survey showed U.S. consumer confidence fell more than forecast in April to its lowest level in 26 years.[42] Bonds stayed lower even after a government report yesterday showed Europe's second-biggest economy grew at the slowest pace in three years between January and March as higher credit costs and falling house prices choked expansion. "It's a bad week for bonds as people are unwinding safe- haven bids,'' said Charles Diebel, head of European interest-rate strategy in London at Nomura International Plc.[42] Record oil prices, declines in the pound and the dollar, and a global credit shortage are buffeting the European economy as the U.S. teeters on the brink of a recession.[24]
Monday's forecast marks the latest downward revision to growth in recent months as the prospects for the U.S. economy have worsened and the credit crunch has deepened.[15] The French economy was projected to grow 1.6 percent in 2008 instead of 1.7 percent and Italian growth was cut to 0.5 percent from 0.7 percent previously.[2]
Thanks to continued high economic growth coupled with salary-growth restraints, the deficit should fall further to 2 percent in 2008.[31] Barring changes in economic policy, the fiscal deficit should rise to 2.25 percent of GDP in 2009.[31] As for the deficit, in 2007 a decrease to 2.2 percent of GDP occurred compared to 3.6 percent in 2006, which means that Slovakia successfully got under the allowed 3-percent threshold.[40]
EU economy proves resilient The EU economy is still in a relatively good position to weather the global headwinds on the back of improved fundamentals, reflected e.g. in the absence of macroeconomic imbalances and healthy public finances. Both the average public deficit and current account position were below 1% of GDP in 2007, even though differences across Member States remain large.[21] The Commission said the EU economy is still in a relatively good position to weather the global headwinds on the back of improved fundamentals, thanks in part to the positive impact of past structural reforms and increased credibility of macroeconomic policies.[3]
The EU treaty also says the criterion has to be met in a sustainable way. "It's broadly positive, although the forecasts don't completely rule out a surprise decision," said Dresdner Kleinwort analyst Raffaella Tenconi. "I'll stick with my view (that there is a) 70 percent chance Slovakia is in, and 30 percent that they aren't." [18] The Commission will recommend on May 7 whether Slovakia should adopt the euro on Jan. 1, following Slovenia, Cyprus and Malta, which, like it, joined the EU in 2004.[18] In the report, the European Commission confirms that the country has met all the conditions to switch to the euro on 1 January 2009. "In its convergence Report, the commission concludes that amongst the assessed member states only Slovakia fulfils the conditions for the adoption of the euro," says the draft document, set to be presented on 7 May.[34] Brussels - The European Union's executive Monday urged Slovakia to step up its anti-inflation fight as the former East Bloc nation awaits word on its bid to switch to the euro on January 1.[19] France's conservative government unveiled a new plan to tackle rising prices in the shops through more competition - including encouraging more large supermarkets to be built. French President Nicolas Sarkozy has also pushed the European Union to put more emphasis on its agricultural production, to guarantee food security at home.[25]
Consumer prices have been driven up by the rising cost of fuel and food although the ECB's own forecasts suggest inflation will hit 2.9% for 2008 as a whole. [15] The inflation and the real unit labour cost forecasts were increased, so that signals there is a gradual increase in demand led pressures."[33]
Slovak leaders insist that adopting the euro will not lead to an inflation burst - as happened in Slovenia after that country joined the eurozone last year. [19] In eurozone news, four German states reported a decline in April consumer price inflation and many economists believe German annualized inflation will be below March's level of 3.3%.[37]
Whilst our economies have proved resilient to the external shocks so far, and we expect continued, albeit slower, job creation, we need to stick to sound macro-economic policies and carefully avoid starting an inflation spiral that would particularly affect low income families", said Joaqu'n Almunia, Economic and Monetary Affairs Commissioner.[21] The convergence report evaluates the economic and fiscal policy development of the EU member states which are not part of the bloc's monetary union.[34] Almunia said the EU assumes average oil prices will stay above $100 throughout 2009.[12] Oil price assumptions are $101.2 billion euros per barrel in 2008 before easing to $100 billion in 2009.[7]
The price of the 4.75 percent security due June 2010 fell 0.41, or 4.1 pounds per 1,000-pound ($1,983) face amount, to 100.40.[42]
The Dow Jones Euro Stoxx 600 Index climbed for a second week, gaining 0.3 percent, while the U.K.' s FTSE 100 Index rose 0.6 percent. The pound fell against the dollar this past week, dropping 0.8 percent to $1.9829, as traders bet the Fed will this month signal it will slow the pace of interest-rate cuts.[42]
While further hikes in rates are not expected Oster does see a chance of one further increase if there is no slowing in demand in coming months, while longer-term the bank sees rate cuts beginning in 2009 and expects cash rates to be back down at 6% by late next year or early in 2010.[23] The recommendation of EC and the European Central Bank (ECB) will be known next week. It will subsequently be dealt with by EU-member countries' finance ministries (ECOFIN). If they approve Slovakia's accession to the eurozone, the exchange rate will be set in July.[40] Inflationary fears have led the European Central Bank (ECB) to keep interest rates on hold at 4%.[15]
The currency has shed 4 percent versus the dollar in the past six months on speculation the Bank of England is trailing the U.S. central bank in terms of borrowing-cost reductions.[42]
"The financial turmoil is proving deeper, wider and longer-lasting, while the downturn in the U.S. looks set to be more pronounced and protracted than assumed in the autumn forecast,'' the commission said in today's report. [24] "The persistently negative growth gap with the average for the euro area will widen further, despite the relatively modest exposure of the Italian banking system to the financial turmoil," the commission said.[35] The negative growth gap in Italys export markets will widen as exports are hit by the global slowdown stemming from the international financial market crisis, coupled with the euros strength, the commission said.[35] Britain's growth will be dampened by downward pressures in the housing market and turmoil in the financial sector, the Commission argued, but exports are likely to become more competitive because of the dramatic fall in the value of sterling against the euro.[16]
Investment growth is weakening due to a cooling-off of overvalued housing markets and the cyclical slowdown. Private consumption growth is also set to slow with employment and real wage growth decelerating this year and consumer confidence in steady decline. [3] On the inflation front a minor improvement is projected with CPI coming in at 6.3% in 2008 and dropping to 3.7% in 2009. Unlike with its expectations on CPI and growth, the EC is more upbeat on Hungary's budget performance than previously.[21] Slovakia's 12-month average inflation was 2.2 percent in March, comfortably below the permitted ceiling of 3.2 percent.[18] Gilts dropped on speculation the Bank of England will slow the pace of interest-rate cuts on concern inflation is accelerating.[42]
The large contraction of industrial production in the fourth quarter of 2007 suggests that gross domestic product contracted at the end of last year, the commission said. It expects a slight recovery in the first quarter, meaning Italy would avoid a technical recession, which is generally defined as two consecutive quarters in which GDP contracts. [35] Grimaud believes prices actually started rising several years ago, when the euro replaced the French franc. She says the high price of gasoline makes it difficult to use the car, and her family now buys discount brands at the supermarket because they are cheaper.[25] Ending the EU deficit investigation is a condition for Slovakia to join the euro.[19] If it gets the final go-ahead, Slovakia should join the EU as it celebrates the 10th anniversary of the introduction of euro in 11 states in 1999.[34]
A weak U.S. dollar will likely hit European exporters harder in the future, the EU said, indicating a shift from earlier predictions that Europe would escape largely unscathed. [12] Later that month, EU leaders are expected to rubber-stamp the decision while in July the conversion exchange rate should be adopted by EU finance chiefs.[34]
"Overall, economic activity is expected to rise only gradually from 4.3 percent in 2008 to 4.7 percent in 2009," it said.[30] The benchmark 10-year Treasury note was trading 5/32 higher in price for a yield of 3.85 percent from 3.87 percent late Friday, while the two-year note was up 3/32 for a yield of 2.38 percent, down from 2.43 percent. The Associated Press, Thomson Financial and Reuters contributed to this article.[13]
"Turkey should be able to increase export growth -in particular in tourism- while the tight monetary and fiscal policy mix will start supporting the disinflation process," the report said. [30] Some went even further. 'This is a clear message that the European Commission is in a positive mood toward acceptance,' said Juraj Valachy, an analyst for RZB Group in Bratislava, the Slovak capital.[19]
SOURCES
1. EU ups 2008 eurozone inflation forecast to 3.2% from 2.6% - Breaking News - World - Breaking News
2. AFP: EU ratchets up inflation forecast to 3.2%
3. EU predicts inflation hike, lower growth for eurozone_English_Xinhua
4. RT' Business: EU hikes 2008 inflation forecast
5. EuroNews EuroNews : European Commission cuts growth forecast
6. EU cuts economic growth forecasts- International Business-News-The Economic Times
7. EU FORECASTS Euro zone growth forecasts trimmed, inflation to spike UPDATE - Forbes.com
8. EC cuts Italy growth forecast in 2008_English_Xinhua
9. UK faces disciplinary action by EU for breaching budget rules - Business News, Business - The Independent
10. Europe's economic outlook deteriorates
11. ireland.com - Breaking News - EC cuts eurozone growth forecasts
12. The Associated Press: EU braces for inflation surge, warning poor will be hurt
13. Europe Firm On Rates As U.S. Plans Cuts - Forbes.com
14. NWAnews.com :: Northwest Arkansas' News Source
15. BBC NEWS | Business | Brussels more downbeat on growth
16. Brussels blows raise pressure on Alistair Darling - Times Online
17. AFP: EU eyes early warning on French finances
18. UPDATE 4-EU forecasts favour Slovak bid to adopt euro - Finance.cz
19. EU urges Slovakia to step up inflation fight (2nd Roundup) - Business
20. TODAY'S ZAMAN - EU says economy in '''inflationary shock'
21. portfolio.hu - Online Financial Journal
22. EU probe into Britain's budget deficit - Telegraph
23. FNArena
24. Bloomberg.com: Economy
25. VOA News - EU Reports Sharp Rise of Inflation Rate
26. Forecast: Eurozone Inflation To Hit 3.2 Percent | April 29, 2008 | AHN
27. EU FORECASTS Euro zone deficit outlook worsens, particularly for France UPDATE - Forbes.com
28. French govt says sticking to 2008, 2009 growth, deficit forecasts UPDATE - Forbes.com
29. EU cuts GDP estimate for Austria to 2.2 pct in 2008, 1.8 pct in 2009 - Forbes.com
30. E.U. Forecasts 4.7 P.C. Economic Growth In Turkey
31. EC Expects Economic Growth Slowdown and Higher Inflation in Slovakia - Slovakia News - sktoday.com
32. Forex - Slovak crown rises after EU data shows on track for euro inflation goal - Forbes.com
33. INSTANT VIEW 3-Slovak inflation fcast indicates euro in reach - Finance.cz
34. EUobserver.com
35. EC trims Italian growth forecast as consumer spending expected to shrink - International Herald Tribune
36. EU threatens action against France over excessive deficit forecast - Business
37. Forex Traders » Forex » Forex News » Fundamental Outlook at 1400 GMT (EDT + 0400)
38. EU's Almunia says bilateral tests, real rates 'reflect an overvalued euro' - Forbes.com
39. HIGHLIGHTS-EU's Almunia on spring economic forecasts | Markets | Reuters
40. Almunia Not Commenting on Slovakias Readiness for Eurozone Yet - Slovakia News - sktoday.com
41. Free Preview - WSJ.com
42. Bloomberg.com: U.K. & Ireland
43. Inflation to hover at 5-6% in FY09: Icra- Indicators-Economy-News-The Economic Times
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