SEOUL (MNI) – The yen’s strength against the euro has been a boon
for German and northern European export competitiveness and this should
spread to the rest of the single currency region soon, European Central
Bank Governing Council member Nout Wellink told Market News
International Friday.

Wellink, who is the Dutch National Bank President, said on the
sidelines of the Financial Stability Board meeting here that he doesn’t
expect an economic “double-dip” and is anticipating a continuation of
growth in 2011 after the ECB revised up its 2010 growth forecast to 1.6%
from the previous projection of 1% in June.

He noted that Europe has had a very strong second quarter and that
“the third quarter should be okay” too, though with some slowing due to
the inventory cycle ending.

Europe is now, “to a very large extent” dependent on Asia, Wellink
said, noting the strength of exports to China and other countries in the
region.

“What is helpful by the way, but not in all respects a positive
development, is the strength of the yen,” Wellink said.

“The euro has been depreciating vis-a-vis the yen for a certain
period already [and] this improved the competitive position for Germany
in the Far East — for example, in the mobile [telephone] sector.”

“Especially Germany, and some other countries in Europe and the
north, are doing quite well at the moment and that will pass on to the
rest of the Europe soon,” Wellink predicted

He acknowledged some slowing growth as the cycle of inventory
building ends in Europe but said that he is not in favor of continuing
with fiscal stimulus.

He said that the ECB’s current monetary policy stance is well
known, but added that Europe “should try to normalize the situation.
Otherwise we are building up problems for the future two to three years
from now.”

He also said that Greece is “on track” with its deficit-cutting
program.

Looking at the rest of the world, Wellink said that India and China
are doing well, noting that evidence of slowing growth in China will
help to mitigate the risk of economic overheating and inflation.

“The only weak respondent at the moment is the US, but on the other
hand we get weak signals and positive signals from the US,” he said.

“The weak spot in the whole picture is the United States.”

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