[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Wednesday, 3 August, 2005, 15:17 GMT 16:17 UK
IMF cuts eurozone growth forecast
Euro symbol outside the ECB's Frankfurt headquarters
The ECB has kept rates at 2% for the past 25 months
Estimates for growth in the 12-nation eurozone have been revised down by the International Monetary Fund (IMF).

The IMF cut its forecasts for growth to 1.3% for this year from 1.6%, and to 1.9% in 2006 from 2.3%.

However, the IMF said the European Central Bank (ECB) had been right to keep interest rates at 2% rather than cut them to boost flagging economies.

The IMF also warned that commentators were becoming too pessimistic about the eurozone's prospects.

Government officials in Germany, Italy and Austria have been urging the ECB to bring rates down as their economies struggle to make headway in the face of near zero-growth.

The IMF report came on the eve of an ECB meeting which is expected to leave interest rates at 2%.

Economic worries

However in its annual report on the eurozone, the IMF did say that a rate cut may be "appropriate" in future if evidence of a fading recovery mounts.

Consumer and business confidence in the eurozone remains low, with labour markets sluggish and high oil prices triggering inflation concerns.

The IMF report follows warnings from the Organisation for Economic Cooperation and Development in July that reform is needed to prevent weak growth over the next 15 years.

The OECD urged the ECB to introduce major competitive reforms, including making labour markets more flexible and integration to push growth above the 2% level.


SEE ALSO:
A breakdown in EU discipline?
14 Jul 05 |  Europe
Eurozone growth warning from OECD
12 Jul 05 |  Business
Eurozone base rates on hold at 2%
07 Jul 05 |  Business
UK to push for deal on EU budget
30 Jun 05 |  UK Politics
EU blasts Portugal over deficit
22 Jun 05 |  Business
Fresh jitters hit EU budget rules
23 May 05 |  Business


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific