The recent strengthening of the euro has not erased gains in competitiveness and is not restraining euro zone growth, European Commission director-general for economic and monetary affairs Mr Klaus Regling said today.
The strength of the euro "has been absolutely positive for the euro zone economy", notably helping lower inflation and interest rates, he said.
"People only focus on the trade effects (of a higher euro), yet that is only 10 per cent of GDP," he told a briefing on the commission's quarterly report on the euro area.
He noted that the yield curve across all maturities has come down by 0.5-0.75 percentage points in comparison with earlier surveys three or six months ago.
Monetary conditions are accommodating, he said.
Euro zone inflation has fallen to 2.1 per cent from 2.9 per cent and "I see no reason it should go above that. I think there's a good chance it will stay there or even be below 2 per cent," he said.
Mr Regling said the euro zone's leading indicators, though declining, are still compatible with growth.
The commission expects euro zone growth to "continue, but at a weaker rate than we previously thought," he said, adding it might accelerate next year.
The recent strength of the euro has not erased the competitiveness gains of the 1990s, with the real effective exchange rate still well below its long term average for the 1980-2000 period, he said.
AFP
AFP
