EU economic and monetary affairs commissioner Pedro Solbes today warned that eurozone growth was "unlikely to bounce back strongly" in the summer. Releasing the European Commission's latest quarterly report on the euro area, Solbes said there were "significant downside risks" to the scenario of a eurozone recovery in the second half of the year. He said economic activity was sluggish in the first half of 2003, with growth coming to a halt at the beginning of the year as geopolitical uncertainties undermined confidence.
The end of the Iraq crisis had not led to a significant recovery of business and consumer confidence, he said. "Available evidence suggests that growth remained anaemic during the spring and is unlikely to bounce back strongly over the summer," he said. "Although the scenario of a gradual pick-up of activity during the second half of the year still remains the most likely one, significant downside risks exist," he added. He also highlighted concerns about both domestic and external demand and called for the impact of the euro's rise to be put in perspective//www.fxcentre.com