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Economic slowdown a worry for ECB

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BERLIN – Economic growth is slowing to a worrying degree across the eurozone and not only in the periphery, European Central Bank (ECB) Governing Council member Erkki Liikanen said in an interview with Germany’s Welt am Sonntag newspaper.

Report By Reuters

“There are a number of indications that the economy is getting weaker and not only in the indebted southern European countries, but across the eurozone,” Liikanen was quoted as saying in an excerpt released on Saturday.

“Economic developments are causing us concern,” he said, adding that noone is immune to the effects of the debt crisis. “Not even the German economy.”

Liikanen did not say what action should be taken to deal with the slowdown, and a Reuters poll this week found economists are evenly split on what else – if anything – the ECB will do.

Thirty-nine economists said the ECB would hold its main refinancing rate at its current record low of 0,75% through the first quarter of next year, while 38 believed it would cut the rate to 0,5%.

The ECB on December 6 predicted the eurozone economy would shrink again in 2013. Its projections for economic performance ranged from a 0,9% drop to a meager 0,3% rise next year, suggesting contraction is far more likely than not.

It had previously penciled in a range of -0,4% to +1,4% for the euro area economy.

On December 7. the central banks of Germany and Austria forecast barely any economic growth in 2013, with the Bundesbank flagging risks of a recession in the eurozone’s biggest economy as the debt crisis hits the bloc’s core.

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