European Central Bank president Jean-Claude Trichet said today that he expects the euro zone to post 'relatively moderate' economic growth this year and next.
Trichet told the EU parliament's economic and monetary affairs committee that recent figures show 'persistently high oil prices' have adversely affected growth over the last few months.
'The recent available indicators of economic activity suggest that the modest growth observed in the second half of 2004 will continue in the first half of 2005, with no clear signs as yet of a broadening or strengthening of the growth dynamic,' he said.
Investment is expected to keep benefiting from 'robust earnings, improvements in business efficiency and very favourable financing conditions', while global economic growth should continue to boost euro zone exports, he said.
'Accordingly, we expect continued, relatively moderate economic growth in the euro area in 2005 and 2006,' he added.
Trichet said differences between euro zone countries' growth rates have 'increased somewhat in the last few quarters' but did 'not appear exceptional from a historical perspective'.
The ECB President also said today that several Asian currencies, and the Chinese yuan in particular, are undervalued compared to the euro and the dollar.
China has come under pressure, particularly from the US but also from the euro zone, to readjust the value of its yuan, which trading partners say keeps Chinese exports artificially cheap.
'It is a question where the message is clear and the message has been sent by Europe and by the United States of America,' Trichet said. 'There is a problem and that problem has to be solved, that is absolutely clear,' he added.
