9 October 2001, 12:06  EU's Solbes sees FY EU GDP growth 'significantly' below.

FRANKFURT (FWN) - EU economic and monetary affairs commissioner Pedro Solbes said EU GDP growth this year will be significantly under 2 pct and GDP may even contract in the third quarter. Speaking in an interview with the Frankfurter Allgemeine Zeitung, Solbes said the EU does not see a prolonged recession either in theEU or the euro zone, but it no longer excludes the possibility that GDP may shrink in the third quarter. A slight recovery is expected in the fourth quarter, but overall growth this year will be "significantly less than 2 pct", said Solbes. The EU has previously forecast growth of 2.5 pct this year and potential growth for the euro zone is defined by the European Central Bank at 2-2.5 pct. "This is certainly one of the most uncertain economic moments of the past 30 years," Solbes told the paper. He said it is very difficult to estimate the knock-on effect on EU countries from the recent terrorist attacks in the US. Even before the attacks however, a survey for the commission had showed that consumer and corporate confidence in the EU had fallen to its lowest level for four years, Solbes said. He added the considerable growth divergences in the EU will continue, with Germany expected to bring up the rear this year. "Germany is certainly a problem," Solbes said, noting that Europe's largest economy has failed to tackle problems in its labour market and social security system with sufficient dynamism. The commissioner said Germany is partly to blame for the EU's low employment rates, as it does not provide sufficient people for the labour market.

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