MNI: ECB Praet Sees Eurozone Growth On Track

--Italy Coalition Fiscal Stimulus Numbers Look 'Big': Praet 

By David Thomas

     BRUSSELS (MNI) - European Central Bank Chief Economist Peter Praet said

Thursday that the euro zone recovery is on track -- at least from a demand point

of view.

     "The economy is doing good but there are clouds -- some say fog -- but I

see clouds, Praet said.

     Speaking at a European Business Summit lunch, Praet said that the spike in

PMI business confidence indicators in Q4 last year had been "unsustainable" even

euphoric.

     Temporary factors had been cited for the slowdown but there were genuine

supply constraints and bottlenecks.

     "There is a significant slowdown but is to do with supply constraints. We

don't see a reason why there should be a slowdown on the demand side," he said.

     From the demand side there was no reason to expect growth to stall, noting

wage growth of 2% across Euro Zone and a stronger 2.8% in Germany.

     But the international scene could produce shocks to the Euro zone economy.

Praet said that the appreciation of the euro against the dollar might slow

growth - up until recently that rise was around 16% since Feb 2017 - after

recent easing this was about 11%.

     Discussing Italy, while noting Italian coalition fiscal plans are not

completely definitive and available yet, the information so far is concerning,

Praet said.

     "Figures we have seen raise a lot of concerns," he said.

     Praet added that Italian fiscal capacity is clearly "limited " noting debt

well over 100% of GDP. The stimulus plan outlined so far, Praet said, looked

big.

     Praet said the challenge for the June EU summit would be to rebuild trust

between member states.

     "The basic question here is trust. How can you gain trust so that you can

address issues with colleagues," Praet said.

     "The challenge for summits is to rebuild that trust," he added

     Praet cautioned that the Italian fiscal plans are still at the elaboration

phase.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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