WROCLAW, Poland (MNI) – The widespread anticipation of a dismal
economic performance in the months ahead overstates reality to some
extent, European Central Bank Governing Council member Jens Weidmann
said Saturday.

Speaking to the press after the meetings here of European finance
ministers and central bank heads, the Bundesbank president also rejected
additional fiscal stimuli in favor of continued budget consolidation.

Although “risks to the economic outlook have risen considerably”
because of the sovereign debt crisis, “the business cycle pessimism that
is currently spreading is in part exaggerated,” he said.

Growth is indeed slowing, but the decrease seen in 2Q was “due in
large part to temporary factors” such as the earthquake and its
aftermath in Japan as well as higher oil prices, Weidmann argued.

“Robust growth will continue, although at somewhat slower rates,”
he predicted. “Against this backdrop, measures for business cycle
stimulation are naturally unnecessary.”

Restoring the confidence of investors is not to be attained by
means of fiscal stimulus but rather via “a consistent implementation of
the announced fiscal consolidation measures,” he argued.

Weidmann said that “the goal must be that a spillover from the
financial markets to the real economy is prevented by prompt political”
action. The importance of political dependability argues in favor of
implementing decisions taken by EMU leaders at their July 21 summit, he
said, even if the Bundesbank takes a mixed view of some of these
decisions.

Also at the briefing, German Finance Minister Wolfgang Schaeuble
was asked whether the Eurozone would pay out the sixth tranche of Greek
aid regardless of the results of the troika’s assessment, given that
authorities fear a Greek insolvency like the devil holy water.

“I don’t know how much the devil fears holy water,” he countered.
In any case, “the situation is not that urgent,” as the country’s
creditors already “have freed Greece well into the next year from the
need to refinance in financial markets.”

However, he predicted that all members of the euro area will likely
approve the aid as well as the expansion of the bailout fund, the EFSF,
by October 10.

The finance minister repeated his assertion that there is no crisis
of the common currency, but rather only of some of the countries using
it.

–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

[TOPICS: M$X$$$,M$G$$$,M$$EC$,MT$$$$,M$Y$$$,M$$CR$,MGX$$$]