ECB survey sees eurozone growth slowing over next five years
The sovereign debt crisis will not only slam the brakes on the eurozone economy in the short term, but will also lead to slower growth in the longer term, a survey said on Thursday.
In its regular survey of professional forecasters, the European Central Bank found that growth expectations for the single currency area have been slashed in the short term, "with the most significant revision (seen) for 2012."
But in the longer term, too, the crisis will dampen growth, the ECB wrote in its November monthly bulletin.
The ECB publishes its regular Survey of Professional Forecasters (SPF) a month before it releases its own quarterly staff economic projections.
And according to the latest survey, professional forecasters are pencilling in area-wide growth of 1.6 percent for 2011, 0.8 percent in 2012 and 1.6 percent in 2013.
In the previous survey in August, the forecasters had been projecting the euro-area economy to expand by 1.9 percent this year, 1.6 percent next year and 1.8 percent in 2013.
But the outlook for the next five years until 2016 was also pared back to 1.8 percent from 1.9 percent previously, the survey found.
The downward revisions were "mainly owing to the evolution of the sovereign debt crisis and the worse than expected external environment," the ECB explained.
On the price front, the experts also downgraded their inflation forecasts slightly.
While area-wide inflation was expected to remain at 2.6 percent this year, it would slow to 1.8 percent in 2012 and 2013, bringing it back within the ECB's definition of price stability, not least because of the "weakening of the outlook for economic growth."
The ECB aims to keep inflation in the 17 countries that share the euro to "just below but close to 2.0 percent".
Last month, the guardian of the euro cut its key interest rate by 0.25 percent to 1.25 percent in a surprise move, arguing that the anticipated slowdown in inflation next year would allow a reduction in borrowing costs to prop up the ailing economy.
© 2011 AFP