BRUSSELS, Dec 8: European Central Bank president Jean-Claude Trichet warned on Monday that the recession-hit eurozone faced several more tough months, in comments to the European Union parliament in Brussels.

“Global economic weakness and very sluggish domestic demand can be expected to persist in the last quarter of 2008 and in the next few quarters,” Trichet told EU lawmakers during his regular appearance at the parliament.

“Subsequently, a recovery should gradually take place supported by the fall in commodity prices and assuming that the external environment improves and financial tensions weaken,” Trichet added.

“As a whole average growth in 2009 could be between minus one per cent and zero per cent according to eurosystem staff,” he said, reiterating a forecast given on Thursday in the European Union capital.

The 15-nation eurozone economy contracted in the second and third quarters of 2008, plunging the zone of some 320 million people into its first technical recession.

The ECB slashed its lending rates on Thursday by 0.75 percentage points, its biggest margin ever, to 2.50 per cent.

But “given the massive change in the economic and inflation environment, the December cut does not look aggressive to us,” Bank of America senior economist Holger Schmieding said.

“We expect further rate cuts to 1.0 per cent or even lower in mid-2009,” he added.

Inflation has fallen sharply from a record 4.0 per cent in July to 2.1 per cent last month, and should continue to fall owing to so-called base effects stemming from the sharp rise in oil prices last year.

The ECB’s inflation target is just below 2.0 per cent.—AFP

Opinion

Editorial

System failure
Updated 12 Nov, 2024

System failure

Relevant institutions often treat right to internet connectivity with the same disdain as they do civil and political rights.
Narrowing the gap
12 Nov, 2024

Narrowing the gap

PERHAPS a pat on the back is in order for the ECP. Together with Nadra, it has made visible efforts to reduce...
Back on their feet
12 Nov, 2024

Back on their feet

A STIRRING comeback in the series has ended Pakistan’s 22-year wait for victory against world champions Australia....
Time to deliver
Updated 11 Nov, 2024

Time to deliver

Pakistan must display a serious commitment to climate change adaptation and mitigation at home.
Smaller government
11 Nov, 2024

Smaller government

THE IMF bailout programme has put the government under pressure to curtail its spending, especially current...
Unsafe inheritance
11 Nov, 2024

Unsafe inheritance

DESPITE regulations, the troubling practice of robbing women of their rightful inheritance — the culprits are ...