EU lacks imagination: Bank of Finland

Source: AFP

Finland's central bank has charged that weak growth in the eurozone is caused by a lack of confidence and imagination in the economic polices by single currency countries.

"Even though there has recently been a clear improvement in the growth prospects for the world economy, especially in the United States, there nevertheless remain considerable risk factors," Bank of Finland said in its quarterly economic bulletin published on Wednesday 17 September.

"There is no clear evidence so far of how sustainable this growth will be. This is particularly true of the euro area, which is suffering at present from a crisis in confidence, a problem exacerbated by a recent lack of imagination in economic policy," the Finnish central bank charged.

Finland has repeatedly urged its euro-partners, particularly Germany and France, to reign in their budget deficits and respect a 3.0% deficit limit set by the Growth and Stability Pact governing the euro-zone cooperation.

At the same time Bank of Finland cut its gross domestic product (GDP) growth forecast for Finland this year to 1.3% from 1.6 previously.

"Growth for 2003 as a whole will be modest at best, due particularly to weak investment and export performance early in the year," it noted.

It also trimmed its growth estimate for 2004 to 2.9% from 3.0, as the improved outlook for the world economy will only be felt in Finland towards the end of the year, it concluded.

In 2002, Finland's GDP grew by 2.2%.