The European Central Bank forecast Thursday that the global economy's shaky recovery from recession will be slowed down by the process of - necessary - fiscal consolidation, according to dpa. In its monthly bulletin published from the bank's Frankfurt headquarters, the world's second most important central bank after the US Federal Reserve said that ongoing budget cuts in highly indebted countries were essential to sustainable recovery. As a result of such cuts growth - which in the 16-member eurozone was 0.2 per cent in the first quarter of 2010 - would remain moderate and uneven, the bank said. "The recovery in activity is expected to be dampened by the process of balance sheet adjustment in various sectors and labour market prospects," the bulletin said. The fall in the price of the euro against the dollar in recent months has provided a boost to European exporters, but experts have forecast that any overall benefit from a cheap currency will be temporary. The bank defended the current key interest rate of 1 per cent, a historic low which has remained in place since spring 2009, as appropriate.
