12 December 2001, 13:58 Duisenberg says euro zone growth 'significantly lower' than expected
BRUSSELS (AFX) - European Central Bank president Wim Duisenberg
said economic growth in the euro zone is now "significantly lower" than
previously expected.
"For the first time since agreeing on the stability and growth
pact, economic growth is significantly lower than previously expected.
This puts the European macroeconomic framework to a real test for the
first time," Duisenberg told a conference.
The ECB is due to publish its latest economic projections tomorrow.
Duisenberg said some euro zone countries' budget positions are
unsatisfactory.
"In a few countries that still have high deficits, the prospects
for a sound budgetary position are not improving sufficiently. This
implies that these countries must give full priority to consolidation,"
he said.
He said several euro zone countries will have deficits of 2 pct of
GDP or more this year and next.
"This is uncomfortably close to the 3 pct limit. These countries do
not have full leeway to allow the automatic stabilisers to operate
freely, and in the current circumstances, meeting the targets of the
stability and growth pact needs to be given continued priority," he
said.
He said tax cuts can have a positive role in combating unemployment
and boosting growth, but they must be financed in an economically
responsible way.
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