MILAN, April 29 - The world is likely to go through a long period of slow economic growth with the U.S. powerhouse falling short of its potential for some time, ECB member Tommaso Padoa-Schioppa was quoted as saying on Tuesday. In an interview with Italian financial daily Il Sole 24 Ore, Padoa-Schioppa also said lower growth prospects and a stronger euro were two of the reasons behind the European Central Bank cutting interest rates in March. "My impression is that this negative phase will be with us for a long time. In my meetings in Washington I have seen very little optimism. There is evidently the impression that we're not going to turn the corner quickly," he said.
Padoa-Schioppa added that it was unlikely the United States would tumble into a depression thanks to changes in economic policy and a banking system which had shown itself to be "extraordinarily robust". Turning to the ECB, Padoa-Schioppa said it had decided to cut interest rates to 2.5 percent in March "not because of the negative geo-political element but...on a strengthening of the euro, the worsening of growth prospects...and a reduction in the risk of price instability". He also said the flu-like SARS epidemic could be more of a risk to the global economy than the war in Iraq if a vaccine was not found soon.//