High oil prices could dent EU growth

July 12, 2005 at 9:23 AM
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BRUSSELS, July 12 (UPI) -- A rise in the price of oil to $60 a barrel would shave growth in the 12-nation eurozone by 0.2-0.3 percent in 2005, EU finance ministers said Tuesday.

In spite of the higher energy prices, finance ministers decided to stick with the predicted growth rate of 1.6 percent in the eurozone this year. This figure is slightly more optimistic than the 1.25 percent growth forecast estimated by an OECD report published Tuesday.

The euro's recent slide against the dollar will limit the economic consequences of higher crude oil prices, the EU Commissioner for Economic Affairs Joaquin Almunia said. A stronger German economy, caused by rising exports, is also expected to boost economic growth in the 25-member bloc. At the other end of the scale, Italy, the third-largest economy in the union, is still struggling to steer clear of recession.

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