Eurozone Faces "Clouds on the Horizon"

EU Economic and Monetary Affairs Commissioner Joaquin Almunia said Friday the eurozone could grow at a faster rate in 2005 than in 2004 but warned that the economy still faced "clouds on the horizon." Addressing an economic conference, Alumnia highlighted the negative impact of rising oil prices on inflation and thus on economic growth. But he noted that inflation was still "low and near" the eurozone target of just under two percent. The EU statistics office Eurostat reported Thursday that the eurozone economy grew 0.5 percent in the second quarter from the previous three months this year and was up 2 percent year-on-year. The European Commission meanwhile left its forecasts for eurozone growth in the third and fourth quarters of 2004 unchanged at between 0.3 and 0.7 percent. For the full year 2004 the commission sees growth of about 2 percent. Almunia added that eurozone economic growth was still predicted to be 2.3 percent in 2005 but acknowledged that it could be somewhat softer.