Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : THE VAST RIGHT WING CONSPIRACY -- Ignore unavailable to you. Want to Upgrade?

To: calgal who wrote (4120)	11/15/2003 11:47:29 PM
From: calgal	Read Replies (1) \| Respond to of 6358

Euro zone set to recover after three-year downturn: Brussels Wed Oct 29,10:26 AM ET Add Top Stories - AFP to My Yahoo! BRUSSELS (AFP) - Dismal growth in the 12-nation euro area is set to stage a strong rebound, the European Commission (news - web sites) said, while warning that four countries are now on course to bust an EU deficit limit. AFP/EC/File Photo Unveiling a six-monthly economic report, the European Union (news - web sites)'s executive arm underlined the increasing strain on the EU's Stability and Growth Pact caused by countries such as France and Germany flouting the budget rules. A downturn that began in 2001 intensified this year, with the report predicting gross domestic product (GDP (news - web sites)) in the euro area to expand by just 0.4 percent in 2003. But it forecast eurozone growth of 1.8 percent next year, "approaching 2.5 percent in 2005". "There are encouraging signs that the worst is behind us," EU Economic and Monetary Affairs Commissioner Pedro Solbes told a news conference. "There is optimism about growth prospects for the next two years," he said. But he warned that EU member states should not let up on structural reforms to overhaul their economies for the longer term. "We shouldn't pass up this opportunity as we did in the last upturn in 1999-2000," he said. The downturn has worsened the public finances of the euro zone's biggest economies, although smaller countries argue that France and Germany failed to mend their budgets when they had the chance in the late 1990s boom. The stability pact requires countries to keep their public deficits under 3.0 percent of GDP. France and Germany are both on course to breach the ceiling for three years running next year, with France in particular at loggerheads with Brussels for flouting the rules and facing the threat of multi-billion-euro fines. In 2004 Germany is expected to record a deficit of 3.9 percent of GDP, France 3.8 percent and Portugal 3.3 percent, according to the report. In 2005 Italy would join the trio in the doghouse with a public deficit of 3.5 percent of GDP unless it changes policy tack, Brussels said. Italian Prime Minister Silvio Berlusconi, the EU's current president, last week said the 3.0 percent ceiling should not be seen as "an absolute", highlighting the mounting pressure on the stability pact. But the comments by Solbes underlined the Commission's view that short-term stimulus plans should not come at the expense of longer-term change to help Europe match US rates of growth. The six-monthly report said the EU was benefiting from a return to growth in the United States, while warning that the euro's steep rally against the dollar posed risks for the competitiveness of European goods. The climate in 2003 was clouded by falls in consumer spending and investment, while exports dipped because of the euro's rebound, the report said. "Confidence both on the consumer and business sides at a global level was undermined by geopolitical tensions linked to the Iraq (news - web sites) war, which created uncertainties about the price of oil," it added. The impact on unemployment was marked, with the euro area expected to shed 200,000 jobs in 2003, the first decline since 1994. The zone's jobless rate is set to rise to 8.9 percent in 2003, from 8.4 percent last year. And despite the budding recovery, the rate is expected to rise further to 9.1 percent in 2004 owing to the number of people entering the labour market outstripping the number of new jobs, before dipping in 2005. Recent indicators, however, such as business climate and purchasing managers' indices "suggest that a recession has been avoided and that a turnaround is in progress at present", the report said. But it warned: "A renewed sharp appreciation in the euro exchange rate could undermine activity mainly in the euro-area manufacturing sector."