ECB warns of delayed world economic recovery

The Jakarta Post, Jakarta

The European Central Bank (ECB) expressed concern that a turn around in the world economy would take longer than many may have expected due to various uncertainties.

Many international economists have predicted that the global economy -- which has slowed down in the last two years --- would start to bounce back in the second half of the year.

However, while calling the prediction a solid analysis, visiting ECB's executive board member Tommaso Padoa-Schioppa told The Jakarta Post recently he was concerned the recovery would be delayed again.

"It's true that the expectation of a pick up was already there a year ago and did not occur. So, we are all concerned that the recovery, a pick up, may be delayed as it has been delayed so far," Tommaso said in an interview.

After the terrorist bomb attacks on the U.S. World Trade Center almost two years ago, which shattered economic confidence worldwide, many had forecasted the world economy would rebound in the second half of 2002 on the back of a recovery in the U.S. and Japanese economies.

But it turned out to be just wishful thinking as the global economy has had to weather the storm of new uncertainties, resulting from a number of tragic events across the globe.

The deadly terrorist attacks on Indonesia's resort island of Bali, the Iraq war and the outbreak of SARS, to mention a few, all proved to have further derailed the world's economic recovery.

Tommaso said that, based on those challenges the world currently faces -- in what he called extra uncertainties after Sept. 11 -- the expectation of a pick up "is more subject to a negative than a positive risk."

"And finally it's also true that the exceptionally high growth rates of the 90s are unlikely to be repeated in the near future.

"But I think that the economic analysis that underlies the projection of a pick up is a solid analysis and should not be discarded too readily. I do hope it proves to be true," he added.