Euro zone economic growth will be only moderate next year and the recovery will be uneven, European Central Bank Governing Council member Yves Mersch wrote in a report released today.
Mr Mersch wrote in an editorial for the twice-yearly bulletin of Luxembourg's central bank, of which he is governor, that a euro zone recovery that began in the third quarter was expected to continue into the fourth.
The ECB policymaker said the single-currency region was benefitting from restocking and a pick-up in exports, as well as economic stimulus packages and measures to restore the health of the financial sector.
"Certain support factors are temporary in nature and the activity will probably be affected for a time by the process of adjustment underway of the balance sheets of companies in the financial and non-financial sectors," Mr Mersch wrote.
"As a result, the euro zone economy should only register moderate growth in 2010 and the recovery should be uneven".
Mr Mersch referred to last week's decision by the ECB to keep the main interest rate at a record low of 1 per cent.
The Governing Council felt such a level remained "appropriate", the editorial said. "Expectations for inflation in the medium and long term are firmly anchored at a level compatible with holding inflation below but close to 2 per cent in the medium term," Mr Mersch's editorial said.
Much of the report focused on forecasts for the Luxembourg economy.
"Also, one should acknowledge that the risks to these projections are overall tending downwards, all in an environment marred by an exceptionally high degree of uncertainty," the central bank's editorial read.
Reuters