We are perfectly aware that the risks associated with current global developments go beyond those effects which we can measure directly. In this respect one may think of indirect influences resulting from changes in confidence, saving and expenditure within the euro area. We have to take these risks seriously and analyse the situation soberly, but we should also not dramatise. Let me now turn to the latest available data. These seem to indicate that economic expansion within the euro area has remained broadly on track, despite the worsening of the external environment.
Domestic demand remains strong, while the contribution to growth from net exports has declined.
Both private consumption and investment provided an important stimulus to the growth rate in the first quarter of this year. The outlook on consumption is supported by higher real earnings growth and declining unemployment, and is reflected in consumer confidence. The evidence for the corporate sector is perhaps more mixed. As compared to the first quarter of 1998, industrial production figures show a somewhat slower rate of increase in the period from April to May, but capacity utilisation has continued to increase and this, combined with low interest rates, should underpin investment. European Commission survey data, such as confidence indicators and the assessment of order books, bear witness to relatively high levels, both with respect to their long-term averages and recent peaks.