As the weak third quarter is likely to be followed by a poor winter half-year, we now see the EMU economy shrinking by 0.3 % in 2009. Nonetheless, there is much to suggest that the economy will recover in the course of next year.

The negative GDP sequential rate in the second quarter is likely to be followed by a slight plus in the third quarter. We have shaved three tenthsof a percentage point off our EMU growth forecast for 2008 to 1.4 %. Today’s figures for France were disappointing.

The evidence that the EMU economy is slowing substantially is mounting. Nonetheless, today’s figures are unlikely to avert the ECB from the rate hike it had as good as announced for early July.

The EMU economy turned out to be surprisingly resilient in the first quarter – but we are in for a cold shower in the second quarter.

Sentiment and capacity utilization are heading south, the jobless rate is no longer falling. Nonetheless, the drop in the inflation rate will not suffice for the ECB. Next week we can expect a clear signal that key interest rates will remain on hold for the time being.

Both Germany and the euro area saw growth momentum more than double in the third quarter. But things will not remain so sprightly in the winter half-year.

A much-worked piece of economic wisdom says: “If the United States sneezes, the rest of the world catches a cold”. This implies that even a slight economic setback in the US has distinctly negative fallout on business elsewhere. Of late correlation between the business cycles in the USA and the euro area has been lower than was the case in the past. What are the causes? Will this trend continue?

With today’s first quarter figures the ground has been laid for EMU economic growth of more than 2.5 % this year. This makes it more likely that key interest rates will top 4 %.

The economic picture in EMU in early 2007 has turned out to be better than previously thought. Thanks to a buoyant final quarter2006, growth of close to 2 ½ % this year is now within reach –assuming solid growth rates in the course of the year.

As the EMU economy outside Germany has performed better than we had expected, we have now nudged up our forecast for euro area GDP growth in 2006. Against this backdrop, we now also see the end of the rate-tightening cycle at a slightly higher level.

Im Euro-Raum besteht trotz der gegenwärtigen Wachstumsdelle keine Notwendigkeit einer geldpolitischen Lockerung. Aufgrund der wackeligen EWU-Konjunktur ist aber 2005 auch nicht mehr mit einer Leitzinserhöhungzu rechnen. Selbst die Kreditentwicklung als monetärer Indikator liefert Anhaltspunkte dafür, dass die EZB noch zuwarten kann.