the early part of the year, some strengthening appears to be taking place during the spring. looking ahead, the governing council expects real gdp to expand at a moderate pace. the ongoing recovery at the global level, and its impact on the demand for euro area exports, should provide support to the euro area economy. at the same time, the financial crisis is expected to have a dampening effect on economic growth given the ongoing process of balance sheet adjustment in various sectors and the expectation of low capacity utilisation and weak labour market prospects. the governing council continues to view the risks to this outlook as broadly balanced, in an environment of high uncertainty. on the upside, the global economy and foreign trade may recover more strongly than projected and confidence may improve more than expected, with the result that the recovery becomes self - sustained. on the downside, concerns remain relating to renewed tensions in some financial market segments. in addition, a stronger or more protracted than expected negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, and the intensification of protectionist pressures, as well as the possibility of a disorderly correction of global imbalances, may weigh on the downside. with regard to price developments, euro area annual hicp inflation was 1. 5 % in april 2010, according to eurostat ’ s flash estimate, after 1. 4 % in march. this is somewhat higher than expected a few months ago and appears to be related, in particular, to upward pressure in energy prices. looking ahead, global inflationary pressures may increase, driven mainly by price developments in commodity markets and in fast - growing economic regions of the world, while euro area domestic price pressures are still expected to remain contained. as a result, overall inflation rates are expected to be moderate over the policy - relevant horizon. inflation expectations over the medium to longer term continue to be firmly anchored in line with the governing council ’ s aim of keeping inflation rates below, but close to, 2 % over the medium term. in the near term, given the developments in energy prices, risks to earlier projections for hicp inflation are tilted somewhat towards the upside, while risks to price stability over the medium term are viewed as still remaining broadly balanced. upside risks over the medium term relate, in particular, to the evolution of commodity prices. furthermore, increases in indirect taxation and administered prices may be greater than currently expected, owing to the need for fiscal consolidation in the coming years.

was the case when greece joined emu – it will be necessary to employ new monetary and non - monetary aggregates. looking at the broader picture, however, there are other types of challenges that one should also consider. these challenges are closely related to what are the fundamental differences between the accession countries and the current euro area members. i have already mentioned what is, perhaps, the most striking difference : the divergence of per capita income levels and, related to this, the difference in price levels. other important factors, however, may also be worth investigating, such as the different potential vulnerabilities to external shocks. some of these'features'of the new member states will probably not have fully disappeared, when these countries will join the euro area. the successful implementation of structural reforms and the acceleration of the catching - up process of the accession countries would definitely facilitate the task of integrating these countries into the euro area. indeed, the deepening of the integration process between current and new member states is likely to reduce the risks associated with the effects of asymmetric shocks. against this background, it needs to be stressed that monetary policy in an enlarged euro area would not – and could not - include, as an own objective, the promotion of the catching up process of any participating country. notwithstanding that catching up is desirable, it is our conviction that the best contribution the ecb can make to enhancing the growth prospects of current and new participants in the single currency area is to guarantee stable prices. moreover, it should also be realised that the entry of new member states into the euro area will neither lead the ecb to redefine the scope for monetary policy, which is the formulation of a monetary policy for the euro area as a whole. if individual countries are faced with an asymmetric economic development, national economic policies should be used to tackle the problems that might be the result of such an asymmetric development. concluding remarks i should like to close my presentation here. yet, before concluding my remarks, let me stress that we at the ecb, as well as at the eurosystem level at large, are fully aware of the magnitude of the political, economic and institutional challenges faced by accession countries along the road towards the adoption of the euro. as central bankers, we are not isolated from the reality surrounding us, and we are committed to play our role in this historical process, particularly with regard to the smooth integration of the central banks of accession countries into the european system of