As a consequence of recent developments, downside risks to the main scenario of a gradual economic recovery have declined, although they have not disappeared. Macroeconomic imbalances in some regions of the world still persist. Although these may not affect the short-term economic dynamics, they constitute a risk over the longer term. In addition, oil price developments may also pose a risk to economic activity.
As regards prices, Eurostat's flash estimate for annual HICP inflation in August was 2.1%. Annual HICP inflation is likely to hover around, or be slightly above, 2% for the remainder of 2003, not least as oil price developments imply some upward pressure in the short term.