By mid-2003, a succession of adverse shocks had held down economic activity in the euro area for almost three consecutive years. These shocks were related to the bursting of the ICT bubble and the fall in equity prices, to the surge in oil prices and the sharp deceleration in global trade, to concerns about corporate governance and yet a further fall in equity prices.
Indeed, real gross domestic product (GDP) rose at an annual rate of only 0.6 percent in the fourth quarter, and the available data suggest that the economy has relatively little momentum going into the first quarter. Moreover, upward pressures on inflation have emerged, emanating in part from the rapid increases in prices of crude oil and some other commodities.