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Euro Zone Economic Survey Highlights - April 2008 Survey date: April 14th, 2008 |
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n As expected, the ECB’s April meeting resulted in another
decision to leave rates unchanged, with the decision reflecting the continued
dilemma of weakening economic growth and rising inflation. According to the
consensus, there is a strong chance that there will be no rate changes at the
bank’s May or June meetings either. |
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n The dollar has continued to hit new lows against the euro as
market analysts predict a further widening in the short term interest
differential in favour of the euro. But sluggish US domestic demand and the
weak dollar appear to have begun to make inroads into the external deficit,
which could provide the dollar with some support in due course. |
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n Projections for GDP growth in 2008 have declined slightly
further this month, despite a slight revival in investment growth
projections. But industrial production forecasts have revived in response to
a rebound in output growth in the first two months of 2008. |
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n Consumer price inflation rose further to 3.6% in March, and the renewed surge in oil prices over the past month suggests that price pressures will continue in the near term. But the consensus suggests that both oil prices and consumer price inflation will ease back in 2009. |
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n GDP growth predictions for 2009 have also slipped a little further this month, although the overall outlook is still for a shallow slowdown in growth followed by a very modest recovery next year. |
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Forecasts
are % change on preceding year unless otherwise noted |
Forecasts* |
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2008 |
2009 |
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GDP
Growth |
1.5 |
1.7 |
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Inflation |
2.9 |
2.1 |
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3
Month Interest Rates (%, end period) |
3.76 |
3.68 |
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US$/€
(end period) |
1.476 |
1.380 |
* Forecasts are the average (mean) predictions
of our panel of leading financial institutions based in the Euro Area.
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© 2008