Despite the adverse impact of the oil prices, a number of conditions remain in place for the euro area to continue to grow in 2005, albeit at a somewhat slower pace than previously anticipated. On the external side, while global growth is moderating, it nonetheless remains robust. In this context, euro area exports should continue to benefit from favourable global demand conditions.
On the domestic side, investment should be supported by the global environment, the very favourable financing conditions in the euro area, solid profits and greater corporate efficiency gained through business restructuring. Finally, there is scope for private consumption to strengthen, in particular if uncertainties surrounding the extent and pace of the implementation of structural reforms are reduced.