mpc.theyserveforyou.com

mpc: 7 There had been few notable developments in the world economy over the past month. The indications were that growth in the euro area had again probably been a little below trend in the final quarter of last year. Growth was likely to pick up to around trend this year. Rising profits and the low cost of capital were likely to stimulate investment. There had already been some increase in bank lending to euro-area companies, and the latest Purchasing Managers Indices (PMIs) for both manufacturing and services were moderately stronger for the second month running. However, there were downside risks. The appreciation of the euro during the latter part of last year would affect export demand. Also, corporate balance sheets were probably, on average, somewhat weaker than in the United States or United Kingdom. A major source of weakness over the past few quarters appeared to be German household consumption, perhaps held back by the uncertainties about the impact of corporate restructuring and labour market reforms on incomes. But German investment was likely to benefit from the increasing price competitiveness of German firms. Excluding Germany, euro-area domestic demand had already been growing at around trend for some time.