The European Central Bank has lowered its forecast for euro zone 2001 GDP growth to 2.2 - 2.8 per cent from 2.6 - 3.6 per cent.
It also lowered its forecast for 2002 growth to 2.1 - 3.1 per cent from 2.5 - 3.5 per cent.
The central bank revised its forecast for 2001 annual average inflation to 2.3 - 2.7 per cent from 1.8 - 2.8 per cent, and its forecast for 2002 inflation to 1.2 - 2.4 per cent from 1.3 - 2.5 per cent.
The forecasts, which appeared in the ECB's June monthly bulletin, are projections based on technical assumptions of unchanged interest and exchange rates.
The ECB says they are therefore not the best predictor of future outcomes because monetary policy will always be adjusted to counter inflation risks.
The central bank said some data on which these assumptions are based have in some cases changed since the projections were compiled.
The projections are prepared twice a year by ECB and national central bank staff, and they provide an input to the ECB governing council's assessment of price developments and risks to price stability.
The ECB said the prospects for euro zone growth are subject to considerable uncertainty and a sharper-than-expected slowdown cannot be ruled out.
But for now domestic demand is expected to remain robust, it said.
AFP