Press Release: Momentum in euro-area economy still strong but downside risks on the rise

After a slowdown in the second quarter, growth in the euro-area economy is expected to remain robust during the second half of the year, indicates the Quarterly Report on the Euro Area published on 4 October 2007. Confidence indicators have softened over the summer but economic fundamentals in the euro area continue to look healthy. Despite the recent financial turmoil, growth projections for 2007 have been reduced only marginally. Strong balance sheets and the improved resilience of the economy should help the euro area weather the storm. Nevertheless, downside risks have clearly increased due to the financial turmoil and the possibility of a sharper slowdown in the USA. The report also analyses how financial markets can contribute to a smoother working of the euro-area economy by increased cross-border risk sharing.