, the re - intermediation of financing onto bank balance sheets. the results of the october 2007 bank lending survey suggest that euro area banks tightened somewhat credit standards applied to loans to households and firms in the third quarter of 2007 and expect to tighten them further in this quarter. however, more data are required to obtain a more comprehensive view of the impact of the financial market turbulence on financing conditions and money as well as credit growth. the uncertainty about financial institutions ’ potential exposure to us sub - prime - related losses and to the valuation techniques of complicated structured credit products, however, does appear to have led to a lack of confidence among banks and thus tensions in the interbank money market. the ecb immediately reacted to the market tensions and continues to contribute to the smooth operation of money markets. turning to global demand factors, global economic activity remains resilient so far despite the turmoil. the impact of the us economic slowdown on world demand ( and euro area foreign demand ) has been largely offset by robust economic growth in emerging economies. but the financial turmoil has increased downside risks to the global economic outlook, intensifying those already stemming from possible further increases in oil and commodity prices, rising protectionist pressures and broader concerns about global imbalances. against this background, international organisations and private forecasters have in fact been recently revising their projections for economic growth slightly downwards. let me now turn briefly to recent price developments and the outlook for inflation. according to eurostat ’ s flash estimate, the annual hicp inflation rate increased strongly to 2. 1 % in september 2007, from 1. 7 % in august, having been below 2 % for 12 consecutive months. a particularly strong effect from the decline of energy prices a year ago, combined with the recent substantial increase in oil prices, contributed significantly to this increase. owing to this effect, we are now entering a period during which we expect the inflation rate to remain significantly above 2 % in the remaining months of 2007 and in early 2008, before moderating again. looking at the performance of different hicp components shows that inflation remains high in unprocessed food – although it declined slightly to 2. 4 % in august – and in services prices. the acceleration of services prices since the start of the year, now standing at an elevated level of 2. 6 % for the fourth consecutive month, is partly explained by the impact of the rise in german vat, but is also linked to the better ability of firms to pass higher costs

and communication technology ( ict ) sector. together with the rapid pace of growth in the 1995 - 2000 period, it prompted some economists to suggest that the us economy was ready to pursue a new path of rapid growth. you will remember when the idea of a ‘ new economy ’ emerged. the rate of growth of gdp in the euro area in the second half of the 1990s was significantly lower than in the us. nonetheless, advocates of the new economy, i. e. believers in the radical implications that the new technologies have for potential growth, suggested that similar developments on this side of the atlantic were likely to take place. the question is why this did not materialise. the contributions from ict technologies ( e. g. computers and the internet ) to labour productivity growth come from three main sources : a direct contribution from the production of ict capital, a direct contribution from the use of ict capital in the production of goods and services, and indirectly from possible ‘ spillover ’ effects from the use of ict capital. these ‘ spillover ’ effects amount, among other things, to the possibility of introducing more advanced management techniques in the production process. 2 when comparing the euro area with other major industrialised economies, we see ( table 2 in the annex ) that the direct contribution from ict capital increased in both periods between 1980 and 1995 and between 1995 and 2004 in the euro area, the united states and the united kingdom, but remains at a higher level in the united states and the united kingdom. in addition, it is commonly acknowledged that the higher tfp growth, in particular in the us, an early report from the oecd pointed to the potential consequences of the internet on tfp and expanded on the benefits that ict brings in terms of new organisation of production and sales. see oecd ( 2000 ) : a new economy? the changing role of innovation and information technology in growth. paris. reflects at least partly the spillovers from the development and adoption of ict technologies as a so - called “ general purpose technology ” that affects the entire production sector. 3 when looking at euro area productivity at sectoral level, we do not find any immediate evidence for such spillover effects in the non - high - tech ict producing sectors 4 ( see table 3 ) : first, the performance of traditional non - high - tech manufacturing industries deteriorated significantly. this is responsible for most of the labour productivity slowdown in the euro area. second, the performance of non - high - tech services remained weak. while