Press Release: Spring 2000: Economic Forecasts 1999-2001

The EU economy performed better than expected last year, new jobs were created in a significant amount and budgetary consolidation progressed. In 2000, average GDP growth in the EU is expected to increase strongly to 3.4% . The expansion could be sustained, at 3.1% , in 2001 as fundamentals continue to be sound and provided that the overall policy-mix remains favourable. The peak of the pass-through of the higher oil prices to domestic inflation is estimated to be in the first quarter of 2000. It should abate thereafter. Average inflation in the euro area is forecast to remain below 2% . Government balances continue to improve and some of the room for manoeuvre created by the growth dividend is being used for tax cuts.