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European business leader optimistic about future
Europe's top business group voiced optimism yesterday about the continent's economic future despite the global financial meltdown triggered by the collapse of Lehman Brothers.
- Reuters
- Published: 23:52 September 16, 2008
Brussels: Europe's top business group voiced optimism yesterday about the continent's economic future despite the global financial meltdown triggered by the collapse of Lehman Brothers.
BusinessEurope, which speaks for some 20 million European companies, said falling oil prices and a weaker euro were expected to lift the euro zone's 2008 economic growth above the 1.3 per cent forecast by the European Commission.
Euro zone inflation may be lower than the 3.6 per cent anticipated by the EU's executive arm in 2008, which may pave the way for the European Central Bank to cut its main interest rate next year from the current 4.25 per cent.
"Our members do not consider that the situation is that pessimistic," BusinessEurope head Ernest-Antoine Seilliere told a news conference.
Seilliere was speaking as central banks pumped massive amounts of extra funding into global financial markets for the second day running to stop money markets from seizing up.
The euro zone's economy grew 2.6 per cent last year while year-on-year inflation was 2.1 per cent.
But with high prices of food and energy denting consumer demand and a strong euro hitting exporters, the economy shrank 0.2 per cent in the April-June period on a quarterly basis.
BusinessEurope said growth would pick up towards the end of 2008, after oil prices have fallen towards $100 per barrel from July's highs of $147 and the euro had eased towards $1.41 from records of just above $1.6.
It suggested an ECB rate cut would be all the more appropriate if economic slowdown continued longer than expected.
Emerging markets
Seilliere said European companies were relatively optimistic about their future because emerging markets continued to expand, Europe's unemployment was low and balance sheets of non-financial firms were strong.
He did not expect any European bank to fail in a way similar to Lehman Brothers over the weekend, whose bankruptcy protection filing triggered a global equities sell-off.
Small and medium-size firms in the real economy do not have problems with securing loans, he said.
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