FRANKFURT (AFX) - European Central Bank president Wim Duisenberg said he has realistic optimism about the prospects for the euro zone economy, despite the world economic slowdown
Writing in the ECB's annual report, Duisenberg said that since the introduction of the euro, the euro zone has become less vulnerable to external economic developments.
"There is good reason for realistic optimism regarding the prospects for the euro area economy", Duisenberg said. He added the ECB was forced to make interest rate hikes last year due to the twin threats to price stability created by the euro's depreciation and the rapid oil price increase.
He said although the risks have become more balanced in recent months, with growth declining from previous high levels, price stability risks persist in the euro zone.
"In late 2000 and 2001 there were still some elements of upward risks to price stability", he said.
Duisenberg said these have stemmed from prospects for wage developments, second round effects from the euro's fall and the oil price, as well as the fiscal policy of certain euro zone governments.