Bank chief: eurozone can weather financial storm

18th September 2007, Comments 0 comments

18 September 2007, MADRID - AFP - The head of the Spanish central bank stressed Tuesday that the 13-nation eurozone should be able to withstand current financial market turbulence thanks to its dynamic economic momentum.

18 September 2007

MADRID - AFP - The head of the Spanish central bank stressed Tuesday that the 13-nation eurozone should be able to withstand current financial market turbulence thanks to its dynamic economic momentum.

"Financial turmoil has come to Europe at a moment happily characterised by a high level of economic dynamism in the eurozone and this given it heighened resistance capacity," Miguel Angel Fernandez Ordonez told a parliamentary committee.

He cited solid corporate performances and healthy employment prospects as pointing to a continued economic expansion over the next several quarters.

But he acknowledged that eurozone growth rates "could be somewhat lower than had been foreseen several months ago" but should not be far off the zone's potential.

The European Commission last week said economic growth in the eurozone had probably passed its peak, as it trimmed its 2007 estimate due to financial market turmoil and a weak French performance.

The Commission marginally cut its 2007 economic forecast for the eurozone to 2.5 percent from an estimate of 2.6 percent.

Fernandez Ordonnez said unsettled financial markets, struggling with the spillover from a sharp downturn in US housing prices and a wave of defaults by high-risk mortgage holders, "have to a certain extent eased inflationary risks, which nonetheless remain to the upside."

But he added that Spanish banks were well-placed to deal with a worldwide shortage of credit given their "high levels of profitability."

[Copyright AFP with Expatica]

Subject: Spanish news

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