From The Economist print edition
This year the euro area’s economic strength has been a source of surprise. Its longer-term prospects may be brightening too
A MONTH ago Jean-Claude Trichet gave what markets see as his standard nod and wink: the European Central Bank (ECB), said its president, would continue to exercise “vigilance” against inflationary pressures. Stand by, in other words, for another increase in interest rates at the bank’s next rate-setting meeting on October 5th. ECB-watchers were therefore well prepared when rates duly rose, by a quarter of a percentage point, to 3.25%.
A slide in consumer-price inflation to 1.8% last month, greased by weaker oil prices, raised no doubts, even though this is at last “below, but close to, 2%”, the ECB’s stated aim. Indeed, with real rates not much more than 1% even now, the ECB looks sure to put rates up again this year and is likely to carry on in 2007.
The euro area’s economy has looked remarkably healthy this year, and keeps surprising forecasters. In The Economist’s monthly poll (see article), the average prediction for GDP growth in 2006 is now 2.5%, up by 0.2 percentage points since last month and by a full point since a year ago. Admittedly, the pace has probably slowed a little since the cracking second quarter, when GDP rose by 0.9%. But the third quarter, which has just ended, was probably more than decent—judging, for instance, by retail sales figures and purchasing managers’ indices for both manufacturing and services, published this week.
The question now is whether this year, set to be the best since 2000, heralds a pick-up in the zone’s long-term growth rate—limited in recent years, by most estimates, to 2% or so—or
المزيد
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