The 12-nation euro zone has reached the lowest point in its economic downturn and should see a recovery in momentum in the first half of next year, the governor of the European Central Bank said yesterday. Mr Wim Duisenberg was speaking as economic data showed euro-zone inflation falling close to the ECB's 2 per cent target.
The 12-nation area's inflation rate was 2.1 per cent in November, as prices fell 0.1 per cent from a month ago. The biggest monthly decreases were seen in Ireland, the Netherlands and Portugal. Ireland continues to have the third-highest rate of inflation, behind the Dutch and the Portuguese.
The figures were in line with analysts' forecasts. The data, which sustained economists in their view that the European Central Bank has room to cut interest rates further in the new year, had little impact on the euro. It remained at around $0.9022, within half a cent of the one-month peak it set on Monday.
Addressing the economic and monetary affairs commission of the European Parliament, Mr Duisenberg also warned that four countries in the area were coming dangerously close to breaching the Stability pact, with public deficits in excess of 3 per cent.
Growth in the third quarter was practically zero, with activity remaining sluggish in the fourth. But he stressed that the region was not in recession, with "the first signs" of recovery likely to appear in the first six months of 2002.
Industrial output in the euro zone fell 1.4 per cent in October - the month after the suicide attacks on the US - from September. The sharp fall in factory production took it to 2.7 per cent below the October 2000 level, the EU's statistical agency, Eurostat, said.
