GROWTH: European Union finance ministers meet in the Spanish city of Oviedo today amid fresh signs of recovery in the euro-zone economy.
The European Commission predicted yesterday that economic growth would be faster than expected in the first six months of 2002, boosted by retail sales and the US economy's unexpectedly robust performance.
The European Commission said its model for quarterly change of the euro-zone's GDP indicated growth in the second quarter of 2002 of between 0.5 percent and 0.8 percent quarter-on-quarter and 0.2 to 0.5 per cent in the first quarter.
"These forecasts confirm that a recovery is taking hold. A moderate upturn in the retail indicator and a strong recovery in the US accounts for the small upward shift compared to the last March forecast," the European Commission said.
Optimism about the economic recovery could be dampened by concern over the high price of oil, which the German chancellor, Mr Gerhard Schröder, warned yesterday could endanger his country's recovery.
During their three-day meeting, the finance ministers are also expected to choose the Greek Central Bank governor, Mr Lucas Papademos as the next vice-president of the European Central Bank (ECB).
Belgium insisted yesterday that its candidate, economics professor Dr Paul De Grauwe, was still in the race to replace France's outgoing vice-president Mr Christian Noyer, who is due to step down next month.
The ministers will be eager to avoid a repeat of the horse-trading that surrounded the appointment of ECB president Mr Wim Duisenberg in 1998, which served to undermine the ECB's credibility.
But Mr Marc Marechal, deputy chief of staff to Belgian Finance Minister Mr Didier Reynders, suggested yesterday that a compromise might be necessary to find agreement.
"One possible compromise could be that one candidate - Prof De Grauwe or Mr Papademos - would replace Mr Noyer but that the other candidate - or his country - would be promised to be given every available chance in the case of a next vacancy," he said.
The next vice-president will serve a full term of eight years and is likely to play an important role in a reform of the ECB's decision-making process to coincide with the enlargement of the EU.
Some members of the Bank's executive board believe that the present system, whereby each euro-zone member-state can speak and vote at all governing council meetings, could prove too unwieldy in an enlarged euro zone.
Mr Duisenberg is expected to be replaced by the governor of the Banque de France, Mr Jean-Claude Trichet, when he retires next year.
However, an investigation into Mr Trichet's alleged role in a scandal surrounding the Crédit Lyonnais bank has cast doubt on his appointment.
