, the fundamentals of the euro area remain sound, including in particular sustained corporate earnings and profitability, robust employment growth and falling unemployment to levels not seen for 25 years. available forecasts for 2008 continue to confirm our main scenario of real gdp growing at around trend potential. this scenario is based on the expectation that the global economy will remain resilient, with the slowdown of economic growth in the united states partly offset by the sustained strength of emerging market economies. continued strong external demand should provide ongoing support to euro area exports and investment. consumption growth in the euro area should also contribute to economic growth, in line with developments in real disposable income, as continued employment growth provides supportive conditions. that said, in view of the potential impact of prolonged financial market volatility and the re - pricing of risk on the real economy, the level of uncertainty surrounding this broadly favourable outlook for economic activity remains high. on balance, risks to the outlook for growth are judged to lie on the downside. these downside risks relate mainly to the potential for a broader impact from the ongoing reappraisal of risk in financial markets on confidence and financing conditions, further oil and commodity price rises, as well as concerns about protectionist pressures and possible disorderly developments owing to global imbalances. as regards price developments, according to eurostat ’ s flash estimate, the annual hicp inflation rate increased very strongly to 2. 6 % in october 2007, from 2. 1 % in september. this sharp increase is a matter of particular concern and it is essential that it does not affect medium to longer - term inflation expectations. to that effect, we have already indicated on previous occasions that we are now in a period during which unfavourable effects from energy prices will have a strong upward impact on annual hicp inflation rates, owing mainly to the marked decline in energy prices a year ago. in addition, these effects have been strengthened by recent substantial further increases in oil, non - oil commodity and, in particular, food prices. overall, we expect the hicp inflation rate to remain significantly above 2 % in the coming months before moderating again in the course of 2008. risks to the medium - term outlook for price developments are fully confirmed to lie on the upside. these risks include the possibility of persistently high oil and agricultural prices, continuing the strong momentum observed in recent months, as well as unanticipated increases in administered prices and indirect taxes. moreover, taking into

benoit cœure : price stability as the basis of a sustained recovery speech by mr benoit cœure, member of the executive board of the european central bank, at the wirtschaftstag 2014, berlin, 3 july 2014. * * * summary only sustainable growth via enhancing the productive potential in the euro area will lead to an environment that secures fair prices for credit and fair compensation for savers, said benoit cœure, member of the ecb ’ s executive board. cœure explained in his speech at the wirtschaftstag in berlin the ecb ’ s monetary policy in the current environment of a stagnating economy. “ in a stagnating economy savers complain about low returns while borrowers complain about too restrictive credit conditions ”. only an economy with sustainable growth and price stability can solve this dilemma. “ the only way to move on from the current low interest rate environment is to reinvigorate the productive potential of the euro are economy ”, cœure said. like ludwig erhard did by establishing the social market economy after the war, euro area countries today need to go on with fiscal, structural and institutional reforms to revive the area ’ s productivity potential. monetary policy can only facilitate that process but not change the long - term path. “ governments should not view the current period of low interest rates and favourable market sentiment as an invitation to abandon the path of fiscal prudence. ” cœure said that the measures the ecb ’ s governing council had agreed in june have been warranted because of the low inflation in the euro area as a whole and also in germany. the fall in german inflation was adding the risk of a race to the bottom for the euro area as a whole, with potentially disruptive economic consequences. “ we had to act, otherwise we would not have lived up to our mandate. ” on the complaints of german savers he said that, as shown by the bundesbank, the current low real rate of return is not exceptional historically. in fact, the real rate of return on deposits had been persistently negative during previous decades, but savers had not realised it because of higher inflation. * * * ladies and gentlemen, last year at this event president draghi quoted ludwig erhard, the father of the “ wirtschaftswunder ”, the german economic miracle. it was the principles of ordoliberalism that erhard applied to put this country on the road to