Eurozone finance chiefs to weigh economic threats
Monday, 12 November 2007
BRUSSELS, Nov 11 (AFP): Eurozone finance ministers will size up looming threats to growth at a meeting Monday as evidence mounts that the record strength of the euro and oil prices are weighing on the economy.
The ministers are to also prepare a joint message that a delegation of Eurozone finance chiefs are to bring to Beijing later this month amid growing European concerns about China's runaway trade surplus.
Ahead of the meeting over dinner in Brussels, the European Commission issued an autumn update of its economic estimates Friday, forecasting that growth in Europe will be weaker than previously expected next year.
Warning that headwinds to Eurozone growth were on the rise, the European Union's executive arm cut its 2008 Eurozone growth estimate to 2.2 per cent from the 2.5 per cent projected in May.
"Clouds have clearly gathered on the horizon with this summer's turbulence in the financial market, the US slowdown and the ever-rising oil prices," said EU Economic and Monetary Affairs Commissioner Joaquin Almunia.
But private-sector analysts and business leaders are increasingly focusing on the impact of the euro's record strength, which brought the currency to an all-time high of 1.4752 dollars Friday, as a threat to growth.
"In our view, such moves have brought into question whether European companies can remain competitive and the likely impact on profits if such currency headwinds persist," Goldman Sachs strategists Hiten Savani and Peter Oppenheimer said in a research note.
The European employers association BusinessEurope warned Thursday that the euro's ascent was the single biggest threat to economic growth and urged politicians to take action.
The ministers are to also prepare a joint message that a delegation of Eurozone finance chiefs are to bring to Beijing later this month amid growing European concerns about China's runaway trade surplus.
Ahead of the meeting over dinner in Brussels, the European Commission issued an autumn update of its economic estimates Friday, forecasting that growth in Europe will be weaker than previously expected next year.
Warning that headwinds to Eurozone growth were on the rise, the European Union's executive arm cut its 2008 Eurozone growth estimate to 2.2 per cent from the 2.5 per cent projected in May.
"Clouds have clearly gathered on the horizon with this summer's turbulence in the financial market, the US slowdown and the ever-rising oil prices," said EU Economic and Monetary Affairs Commissioner Joaquin Almunia.
But private-sector analysts and business leaders are increasingly focusing on the impact of the euro's record strength, which brought the currency to an all-time high of 1.4752 dollars Friday, as a threat to growth.
"In our view, such moves have brought into question whether European companies can remain competitive and the likely impact on profits if such currency headwinds persist," Goldman Sachs strategists Hiten Savani and Peter Oppenheimer said in a research note.
The European employers association BusinessEurope warned Thursday that the euro's ascent was the single biggest threat to economic growth and urged politicians to take action.