The European Central Bank revised up its euro zone economic growth forecasts and also raised the lower end of its inflation ranges for this year and next, ECB President Mr Jean-Claude Trichet said today.
Euro zone GDP growth is projected in a range of 1.6 to 2.2 per cent this year and 1.8 to 2.8 per cent in 2005, up from ranges published in June of 1.4 to 2.0 per cent and 1.7 to 2.7 per cent respectively.
That gives midpoint forecasts, which many economists watch, of 1.9 per cent and 2.3 per cent respectively, against 1.7 and 2.2 per cent in June.
ECB staff now see inflation this year in a 2.1 per cent to 2.3 per cent range, compared with a range of 1.9 to 2.3 per cent in their June projection.
For 2005, the new forecasts show inflation in a range of 1.3 per cent to 2.3 per cent , compared with 1.1 per cent to 2.3 per cent in the previous forecast.
This gives midpoint forecasts of 2.2 per cent and 1.8 per cent, respectively, compared with 2.1 and 1.7 per cent in June.
"We expect the economic recovery in the euro area to continue and become more broadly based over the coming quarters leading to a somewhat stronger upswing in 2005," said Mr Trichet.
"This is also reflected in the ECB staff projections published today. . . . Both (GDP) rates are close to estimates for long running potential growth and for both years they are slightly higher than was expected in the June euro system staff projection."
The ECB staff macroeconomic projections were published on a quarterly basis for the first time this month. Previously, the ECB published the projections in June and December only.