Eurozone, economic growth, inflation rate forecast 2012

World Economic outlook - Eurozone, economic growth, inflation rate forecast 2012, Eurozone inflation rate forecast March 2012, IMF Forecast economy eurozone  : The ECB staff forecasts showed the economy could shrink by 0.5% this year and at best grow by a meagre 0.3%, a slight downgrade of its previous estimate.

The ECB in March forecast inflation of 2.4 percent this year, in breach of its 2 percent limit, even as it predicted the region’s economy will contract 0.1 percent. Euro-area inflation was 2.7 percent in March.

ECB Vice President Vitor Constancio said yesterday that policy makers’ assessment of inflation risks has changed.

“Because we see everywhere economic growth is slowing down a little bit, so we have a different perspective now on the risk for inflation coming from oil and commodities compared to earlier,” he told reporters in Luxembourg. “We believe that oil prices will not continue to go up.”

“Risks to the outlook for price developments are broadly balanced,” Draghi told lawmakers yesterday. Three weeks ago he warned of “upside risks.”

IMF Forecasts

Bundesbank President Jens Weidmann nevertheless said on April 23 that the International Monetary Fund’s forecast for euro-area inflation to average 2 percent this year and slow to 1.6 percent in 2013 may be too optimistic.

“Taking into account rising energy prices and robust core inflation, prices could rise faster than the IMF expects,” Weidmann said. “Even if we are concerned about the impact on the peripheral countries, monetary policy makers must do what is necessary once upside risks for euro-area inflation increase.”

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