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Euro-Zone Economy Has "Solid" Fundamentals
Monday, January 21, 2008
French Fin Min: Euro-Zone Economy Has "Solid" Fundamentals
BRUSSELS (Dow Jones)--France's Finance Minister Christine Lagarde Monday said the euro-zone economy's situation is better than that of the U.S., as it has "solid" fundamentals.
Speaking in a press conference after a meeting of the Euro Group, which comprises finance ministers from the 15 countries that use the euro, Lagarde said that the correction in Asian and European markets Monday was "brutal" but added that it was difficult to draw conclusions from such a day as the U.S. markets were closed Monday.
Lagarde said she was confident that if euro-zone growth were "substantially lower" than expected, the European Central Bank would take this lower growth into account in its monetary policy.
She also said that the euro-zone countries were still committed to cutting their deficits.
Regarding the current foreign exchange situation, Lagarde said she wished volatility would end and added that currencies must reflect the fundamentals.
Lagarde met Thursday with the U.K.'s Chancellor of the Exchequer Alastair Darling, Germany's Finance Minister Peer Steinbrueck, Italy's Finance Minister Tommaso Padoa-Schioppa and Joaquin Almunia, the E.U.'s commissioner for economic and monetary affairs.
"We've been right to focus on what needs to be rapidly improved: transparency on financial markets," Lagarde said, referring to the Thursday meeting in Paris.
The U.K. is not a member of the euro zone.
The French finance minister also said that France's growth in 2008 should be "in the lower end of the 2%-2.25% range."
In its 2008 budget bill, the French government officially forecasts a growth of 2% to 2.5% in gross domestic product. But recently, government officials such as Prime Minister Francois Fillon have quoted the 2% to 2.25% range as the official growth target for 2008.
"There are no hard data proving that France's growth will be significantly impacted" by the U.S. economic slowdown and the current global economic headwinds, Lagarde said.
France's foreign trade with the U.S. represents 8% of its total trade balance, meaning that any impact for a U.S. recession might not be substantial, Lagarde said.
She also said that the reforms the government pushed forward last year, most notably the removal of taxes on overtime, would contribute to further growth in France.
