A survey of economic forecasters conducted by the European Central Bank (ECB) showed experts were expecting the euro zone economy to grow by 1.4 per cent this year, slower than the 1.8 per cent anticipated.
In its regular quarterly Survey of Professional Forecasters, the ECB said "the downward revision of growth prospects for 2003 seems to be the result of high uncertainty mainly associated with geopolitical tensions which are affecting the global economic and financial situation".
Euro zone growth was then expected to pick up again to 2.3 per cent in 2004, but that was still slower than the 2.5 per cent originally pencilled in for next year, the poll showed.
The results of the quarterly survey were published in the ECB's February monthly bulletin. The economic forecasters are a great deal more pessimistic than the EU Commission in Brussels, which said at the end of January it expected gross domestic product (GDP) in the single currency area to expand by 1.8 per cent this year.
The ECB itself also appears to be taking an increasingly gloomy view of the outlook for growth in the 12 countries that share the euro.
It expects area-wide growth to come out in a range of 1.1-2.1 per cent, but top officials have said recently that that forecast was likely to be revised downwards.
In the editorial to its February report, the ECB wrote again that "the most likely scenario is that of a gradual increase, starting in the second half of the year, of real GDP growth rates to levels close to potential".
However, "there remain downside risks to the outlook for euro area economic activity," it noted, pointing to investor nervousness regarding the situation in the Middle East, potential oil price shocks and sagging consumer confidence.
AFP