The euro-zone economy is set to grow by 1 percent this year and 2.25 percent in 2004, provided tensions in the Middle East subside and oil prices remain stable, European Economic and Monetary Affairs Commissioner Pedro Solbes said on April 4.
"Our baseline scenario is based on the assumption of a reduction in geopolitical tensions by midyear. Under this scenario we expect euro-area growth at around 1 percent in 2003," Solbes told a news conference on the first day of a three-day meeting of European Union finance ministers at Vouliagmeni, on the outskirts of Athens.
"A more solid average growth rate of around 2.25 percent could be realized next year," Solbes added.
Greek Finance Minister Nikos Christodoulakis, whose country currently holds the EU presidency, said the economy of the 12-nation euro zone was not expected to slide into recession but was nevertheless hampered by domestic and international factors.
"We do not expect a recession. Our economic policies are more or less moving in the right direction," Christodoulakis said. "(But) the fallout of the war against Iraq is felt across the world. A lack of confidence is a major obstacle on the path to recovery."
Oil prices could remain volatile for the foreseeable future, he added. "It's of crucial importance for stability to prevent eventual oil price increases spilling over into other sectors."
Christodoulakis also pointed to homegrown reasons hampering growth in the euro zone.
"We need to accelerate reforms in the financial, product and labor markets in order to fully exploit our countries' growth potential," he said.
The Greek minister said the European Union's much criticized Stability and Growth Pact - which requires euro-zone countries to keep their public deficits below 3 percent of gross domestic product - was the best way to combine investor and consumer confidence with macroeconomic stability.