MADRID (AFX) - The European Central Bank is likely to come "under pressure" to cut interest rates this summer in an environment of slowing euro zone economic growth, according to Banco Bilbao Vizcaya Argentaria SA Director of Analysis Miguel Sebastian.
Speaking to reporters, Sebastian said: "The problem for the euro zone economies is the excess of supply, due amongst other things to the fragmentation of the markets."
"The ECB is likely to be under pressure to cut rates by 25 basis points in the summer," he said.
While he sees the EMU economies growing more than the U.S. over the next few months, Sebastian said this situation "will not last," noting that he expects the U.S. to register a recovery from the second half of 2001.
BBVA is forecasting both U.S. and EMU GDP growth of 2.5 pct in 2001, while the Spanish economy is seen growing at 2.8 pct, he said. "The growth rate will allow for continued job creation and will alleviate inflationary pressures," Sebastian said.
BBVA sees Spanish inflation at 2.8 pct in 2001, compared with the government's target of 2 pct.
With regard to the outlook for the euro over the next few months, Sebastian said he sees "little margin for appreciation... We don't see it recovering parity with the dollar during this year."
On the prospects for Latin America, he said growth will be "more balanced and more homogeneous" in 2001, based on an upturn in domestic demand.
The net impact on the region's economies from the slowdown in U.S. economic growth will be positive, he added.
Turning back to the Spanish economy and its slower investment growth rate compared with other European countries, Sebastian noted that the large majority of Spanish companies tend to invest overseas "given the maturity of other European markets."
But he said construction investment in Spain is still growing more than the economy.
"We don't see any risk of recession for the Spanish economy," he said.