(Xinhua)
Updated: 2007-11-20 09:27

BRUSSELS -- The current economic situation in the euro zone is not easy, the European Union (EU)'s Economic and Monetary Affairs Commissioner Joaquin Almunia said on Monday.

A Euro symbol is seen in front of the European Central Bank in Frankfurt, June 2007. [Agencies]

"The situation is not easy but we have pretty good fundamentals in the European economy that will help us weather the turbulence in the financial market," Almunia told reporters ahead of an international conference on new way to measure national well-being beyond gross domestic product (GDP).

"We have the baseline scenario -- growth around potential, around 2 percent, but with some clear downside risks coming from the situation of the financial market, the possibility of the US slowdown, and the risk of higher oil prices," he said.

In its autumn economic forecast, the European Commission said the economy of the 13-nation bloc sharing the same currency euro would slow down from 2.6 percent this year to 2.2 percent in 2008 and 2.1 percent in 2009, citing the recent financial turmoil, rising oil prices and economic slowdown in the United States.

Almunia again acknowledged that there were upside risks to inflation in the euro zone due to hiking oil and food prices.

He also said he agrees with European Central Bank President Jean-Claude Trichet who described the euro's sharp appreciation against the US dollar as "brutal".

The euro has gained 15 percent against the dollar over a year ago, which makes European exports less competitive.