EU Industry Group: EU Downturn Bottoming Out

By Agence France-Presse The association of European industry leaders, UNICE, said the European Union appeared to be emerging from an economic slump but nonetheless cut its EU growth forecast this year to 0.5% from an earlier estimate of 1.2%. "It is a matter of concern that, facing the same uncertain environment, Europe is unable to react and to recover as quickly as the United States," UNICE said in its latest six-month economic outlook. "Nevertheless, our survey suggests that Europe is bottoming out," adding that growth in the 15-nation EU should come to 1.8% in 2004. It said its forecast of a recovery in the second half of this year remained valid, although the turnaround would unfold at a milder pace than previously foreseen. Monetary policy had succeeded in cutting inflation but foreign exchange fluctuations had to be closely monitored, according to UNICE. "While the strength of the euro could contribute to lower inflation, excessive foreign exchange movements could be harmful to European competitiveness," it said. It called for fiscal discipline and for respect for the provisions of the 1997 Stability and Growth Pact, which requires eurozone members to keep their annual public deficits to less than 3% of output. UNICE, in addition, urged governments to undertake structural economic reforms in order to boost the competitiveness of EU companies. Copyright Agence France-Presse, 2003