--Zalm Says No Sign of Impact From Slowing German Economy, But Netherlands Could Use Cooling Down Due to Overheating Signs
BRUSSELS (MktNews) - The Eurogroup continues to believe that eurozone growth will come in just below 3% this year and next, Belgian Finance Minister and Eurogroup Chairman Didier Reynders repeated Sunday night after the Eurogroup meeting here.
"We're convinced it is possible to have growth around 3%, perhaps just below" this year and next, Reynders told reporters after the meeting of eurozone finance ministers here.
"We are armed to resist the U.S. slowdown and the financial crisis in Japan," he added.
The Eurogroup, the European Central Bank and the EU Commission share the same view about the positive outlook for eurozone internal demand this year, he added.
The most important factor going for the euro is the maintenance of a strong European economy with robust internal demand as well as low inflation, Reynders said.
"Low inflation, with a strong European economy, is a good thing for a strong euro," he said.
Reynders' comments were nearly identical to those he made before the meeting.
"For the moment, we still have a good growth capacity for the interior of the eurozone," Reynders said as he entered the meeting, which included European Central Bank President Wim Duisenberg. "Most eurozone officials are completely confident of the capacity this year and next to maintain an acceptable growth level."
"(Seen) historically, growth of around 3% is very good," he added. Dutch Finance Minister Gerrit Zalm said that some slowing in Germany would be good for the Dutch economy, which is showing some signs of overheating.
Zalm, also speaking to reporters as he entered the Eurogroup meeting, said he had "not yet" seen any signs that the slowing in the German economy was spilling over into other countries. "It's far too early," he said.
"We are seeing rather strong (upward) movements in other countries like ours, so I don't think there is as yet any reason to panic. As (far as) the Netherlands is concerned, we could use some cooling down because the economy is showing some signs of overheating," Zalm said.
EU monetary commissioner Pedro Solbes repeated Sunday that April's official revision of the Commission's eurozone growth forecast for this year will be around 3%, but he was not more specific.
Italian business daily Il Sole 24 Ore reported Friday that the Commission would revise its forecast for eurozone growth to 2.9% for this year, down from 3.1% previously.
The comments come amid further signs of economic slowing in Germany, the eurozone's largest economy. Last week the respected Kiel Institute lowered its forecast for German growth to only 2.1% this year, down from 2.4% previously, though it cut its 2001 eurozone forecast only slightly, to 2.5% from 2.6%.
The ECB continues to project that eurozone growth this year will be around 3%, even though many private forecasters have lowered their projections in recent months. Most analysts expect the ECB to cut official interest rates by the end of the second quarter, in part due to signs of slower eurozone growth later this year and next.