Officials Predict 3% Growth in Euro Zone

European finance ministers expressed optimism that economic growth will stay on track in the euro zone even as the U.S. ceases to be the global economic locomotive.

“We are convinced it’s possible to have growth of around 3% this year and next, perhaps just below 3%,” Belgian Finance Minister Didier Reynders said after leading a meeting of euro-zone ministers. Europe is “armed to resist the slowdown in the U.S. and Japan.”

Though euro-region growth sped to 3.4% in 2000, the fastest in a decade, seven European Central Bank interest rate increases since November 1999 have taken the steam out of the recovery. Business investment began to tail off in the fourth quarter and analysts predict that ebbing demand from the U.S. will restrain the European economy this year.

The central bank will probably leave its main interest rate unchanged at 4.75% on Thursday, analysts said. A report Friday is likely to show that euro-zone inflation rose to 2.5% in February from 2.4% in January, edging away from the bank’s 2% target ceiling.

“We continue to maintain our position of close to 3%,” European Union Monetary Commissioner Pedro Solbes said of the likely expansion rate in 2001. The predictions squared with a forecast made last week by ECB President Wim Duisenberg.

Fourth-quarter growth was uneven in the euro zone’s four largest economies, representing 80% of total gross domestic product. The expansion cooled in Germany and Spain, the No. 1 and No. 4 economies, while growth accelerated in France and Italy, the No. 2 and No. 3 economies.

Germany, which sells a 10th of its exports to the U.S., has seen a more abrupt slowdown than its neighbors, recent figures indicate. Factory orders fell at the fastest pace in more than five years in January, and unemployment rose for a second month in February.

Germany’s problems have yet to spill over to other European economies, Dutch Finance Minister Gerrit Zalm said.

“It’s far too early,” Zalm said. “We are seeing rather strong movements in other countries like ours. I don’t think there’s any reason to panic.”