Economic growth in the 12-country euro zone will be below 2 per cent, not only this year but probably next year as well, Bundesbank president Mr Ernst Welteke said in remarks released today.
As head of the German central bank, Mr Welteke sits on the governing council of the European Central Bank.
The ECB estimates the single currency area has potential to grow by 2 - 2.5 per cent. "I believe that growth in 2002 will be higher in 2002 than this year, but possibly won't reach the potential."
His comments are more pessimistic than the International Monetary Fund which predicted growth of 2.2 per cent next year for the single currency area after 1.8 per cent in 2001.
Welteke said the September 11th attacks would have a negative impact on euro-zone growth. But he was "cautiously" optimistic not only that Europe would be able to escape "a wide recession", but would see a rebound in growth in the medium term.
Euro-area fundamentals "are better than they have been for years," Mr Welteke said. "That means there is reason to remain cautiously optimistic that the crisis can be overcome, not only in the short term, but in medium and long term as well."
The United States would probably see negative growth in both the third and fourth quarters, technically speaking a recession, Mr Welteke continued.
As for Germany, the biggest economy in the euro zone, "we can be happy if we reach 0.8 per cent."
Third-quarter growth could be "nil or even negative" after stagnation in the second quarter, he added. By contrast, the German government is more optimistic, forecasting, in public at least, growth of 1.5-2.0 per cent this year.