'Worrying signs' for euro economy
Economic growth is slowing to a worrying degree across the euro zone and not only in the periphery, European Central Bank governing council member Erkki Liikanen said in an interview to be published tomorrow in Germany's Welt am Sonntag newspaper.
"There are a number of indications that the economy is getting weaker and not only in the indebted southern European countries, but across the euro zone," Mr Liikanen was quoted as saying in an excerpt released today.
"Economic developments are causing us concern," he said, adding that no-one is immune to the effects of the debt crisis. "Not even the German economy." Mr Liikanen did not say what action should be taken to deal with the slowdown, and a Reuters poll this week found economists are evenly split on what else - if anything - the ECB will do.
Thirty-nine economists said the ECB would hold its main refinancing rate at its current record low of 0.75 per cent through the first quarter of next year, while 38 believed it would cut the rate to 0.5 per cent.
The ECB on December 6th predicted the euro zone economy would shrink again in 2013. Its projections for economic performance ranged from a 0.9 per cent drop to a meagre 0.3 per cent rise next year, suggesting contraction is far more likely than not.
It had previously pencilled in a range of -0.4 per cent to +1.4 per cent for the euro area economy.
On December 7th the central banks of Germany and Austria forecast barely any economic growth in 2013, with the Bundesbank flagging risks of a recession in the euro zone's biggest economy as the debt crisis hits the union's core.