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Gold/Mining/Energy : Euro Impact on Gold, USD ... -- Ignore unavailable to you. Want to Upgrade?

To: banco$ who wrote (34)	11/30/1998 6:18:00 PM
From: banco$	Read Replies (1) \| Respond to of 289

Europe econ growth may outpace US in 1999- Conf Bd NEW YORK, Nov 30 (Reuters) - Falling interest rates and a swiftly growing service sector may propel European economic growth at a faster rate than U.S. expansion in 1999, the Conference Board said on Monday. U.S. gross domestic product (GDP) should grow 3.5 percent overall next year, but may flag later in 1999 as rising labor costs and higher interest rates put pressure on corporate profits, the research firm said in a report. ''The U.S. will continue to perform very well, but fatigue is setting in as labor costs rise and interest rates return to more normal levels,'' Gail Fosler, chief economist at the Conference Board, said in the report. As they become more focused on the service sector, European economies soon should experience ''substantial productivity gains,'' the report said. ''Compared to the U.S., where the private service sector accounts for 73 percent of gross domestic product and 80 percent of employment, the European service sector has just broken 50 percent of GDP and was only 45 percent of total employment in 1996,'' Fosler said. European trade flows have sheltered the region from the worst of the global economic turmoil, the report said. Developing European economies comprise the largest emerging market for European products and services, while the United States counts Latin America as its most important developing trading partner, according to the report. In addition, only a very small percentage of European exports are aimed at the slumping Japanese economy, whereas Japan is the second-largest U.S. export partner, the report said. Interest rate convergence heading into Economic and Monetary Union (EMU) should continue to underpin economic growth in Europe over the next year, the Conference Board said. Short-term rates are steadily converging toward those of Germany, it said. EMU heavyweight Germany has an overnight repo rate of 3.30 percent, lower than those of most other European countries. Long-term rates in the 11 EMU countries also are declining, the report said.