Transcript of a Briefing with Journalists By Horst Köhler, Managing Director, IMF

September 19, 2001

Horst Köhler
Horst Köhler


Argentina and the IMF

Brazil and the IMF

Japan and the IMF

Pakistan and the IMF

Turkey and the IMF

United States and the IMF

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Transcript of a Briefing with Journalists
By Horst Köhler
Managing Director
International Monetary Fund
Wednesday, September 19, 2001
Washington, D.C.

MR. KÖHLER: Ladies, gentlemen, welcome and thanks for your interest in meeting with me and my colleagues. I thought I should meet at least some of you in the press because normally we would have been now in a very intensive work process preparing the Annual Meetings, including press, but the Annual Meetings, as you know, we will not hold them at the scheduled date of end September. Because there has been an event, which is, of course, of major interest and concern, I thought we should meet you.

Here in the Fund the shock and the sadness about these attacks in New York and Washington is maybe even more felt than outside in the world because we now know that the killed people come from all over the world, not just Americans but from all over the world. And you may know that here the staff--there are 141 nations represented--all feel that is something which attacked them also. And based on that, I sense here a strong feeling in this institution that even more after this attack, there is a need for cooperation, international cooperation, and we do think that in this institution we have a lot of common ground for this cooperation. And this is also the reason why I am very interested to have an IMFC [International Monetary and Financial Committee] meeting, or some kind of IMFC meeting, say late October or early November, to demonstrate that there is an international community which has for us and institutions where there is a functioning cooperation--and that there is common ground for this cooperation.

The agenda for this IMFC meeting late October, early November, will certainly be, again, the global economy and the review of progress in fighting poverty, but also the review of progress in strengthening the international financial system.

But the most immediate concern is, of course, the global economy, and there is no doubt that the risks--the downside risks--have increased. Uncertainties are higher than before; and it will be crucial, the impact on confidence, particularly consumer confidence and business confidence.

It is, frankly, too early to have a clear forecast about this impact on consumer and business confidence. But in our view, the worst would be some sort of panicking, some sort of frantic action in order to demonstrate that something is happening.

We discussed here in the institution yesterday, including the Board, the global economy, and the overall assessment is that still we expect a recovery in the U.S. later in this year, in the global economy, maybe a bit delayed, maybe a bit less strong than expected some months or weeks ago, but still we expect a recovery as the most likely scenario.

This assumption is not least based on our judgment that we should not forget about really improved fundamentals in the global economy. And this is first that budgets are broadly under control in the world. Inflation is really no acute problem. External positions have clearly improved since, say, for instance, the Asian crisis. We have now mostly flexible exchange rates, and we also think that new technologies and the potential for productivity gains are by far not yet fully exploited.

So altogether that means there are fundamentals, there are factors where we believe that we are today in a much better position to deal with the very difficult situation in the global economy than maybe three, four, five years ago. And, furthermore, policy has reacted. I do think that the decisions of the central banks--U.S., Europe, all over the world--to inject liquidity and to cut interest rates is not only a powerful demonstration that there is a policy response, but also that this policy response will have a positive impact.

I have, for instance, no doubt that the aggressive interest rate cuts will have, of course, their impact. It is a matter of time, not a question of if.

The central banks, the monetary policy--which, as you know, was always in our view the most important instrument for the first line of action in the last weeks and months against the downturn in the global economy--they reacted powerfully, and I think this is very, very encouraging.

And there is another element--I mean, it's not new, but I would like to make you aware of it. The financial system worked. Financial markets worked. And that demonstrates that, again, fundamentals in the global economy are not as bad as some, say, overly pessimistic people are now thinking. And part of the fact that financial systems have now really demonstrated their resilience and that they work is also due to activities of the Fund, of the initiatives taken after the Asian crisis.

So the monetary policy responded. It will have a positive impact. That's good. Secondly, there are other areas of economic policy where there is room for action if there is a need.

In the U.S., I think the most and, rightly so, is done. I look to Europe. I think it is very much appreciated that the ECB lowered rates. I do think more can be done, particularly by the economic policy people, in accelerating structural reforms. This should be the answer now in this situation. And I also do think if there is a need to implement the Stability and Growth Pact, which is a major feature for the euro introduction--they should introduce or implement this Stability and Growth Pact in the appropriate way, meaning now to pay attention on fiscal discipline but not, say, counteracting an increase in deficits because of a lowering of revenue.

Japan: I do think it's clear what has to be done; that is, even more aggressive monetary easing, just buying back government debt, setting a target for coming back to get rid of deflation, and also a clear and, say, convincing start with structural reforms, particularly tackling the non-performing loan problem in their banking system. And I very much appreciate that the financial authorities in Japan have now agreed to work with us in the context of the Financial Sector Assessment Program. I think there is an absolute awareness that the time is over for talk and now is the time for taking action in this area.

Another very important factor for confidence-building, in my view, is that there should be a start for a new trade round. I do think this is particularly important in order to demonstrate that the international community has not given up on a policy of integration, of openness, because this is a major vehicle for fighting poverty and getting sustained growth in the global economy. So, therefore, I would like this to happen, at least to start a new trade negotiating round.

The emerging markets, of course, are in a very difficult situation because of higher risk aversion. But here again, also, there should be no panicking because markets are able to differentiate. Markets are aware of good or better policies. And, therefore, the emerging markets should stay the course of structural reforms, output-oriented policies. I have no doubt that this will at the end pay off for them.

The role of the IMF in this: we stand ready with advice, with possibly also financial support if there is a need. We are in touch with all countries where we need--where we think there is a need for more attention, and have a kind of preparatory talks and work on contingencies.

So all together, ladies and gentlemen, we are in a difficult situation. It would not make sense here to paint rosy pictures or that I feel I can speak out and then people say, "That's good, he's optimistic, therefore it's good." I think this situation is serious. But clearly more factors in our assessment speak for the assessment that a recovery is the more likely scenario, and not a broad, full-fledged global recession.

We expect this recovery, again, as I said it before, coming later in the year, maybe early next year. But it will come, and the very proactive reaction of monetary policy should give us some comfort that there is attention all over the world from economic policymakers. I myself was stranded in Berlin after flying back from Berlin to Washington and had to return to Berlin. I had been in touch with all major central banks in this climate of serious consideration. But also their commitment not to panic but to act in a considered way--and this happened--gives me, and should give all over the world, some comfort that things will improve.

Thank you.

QUESTION: Joe Kahn with the New York Times. One quick question and one I'm hoping for a little bit more detail on. The first one is, when you say that you don't expect the world to go into a broader, full-fledged recession, are you using the IMF definition of below 2.5 percent world GDP growth as being a recession when you refer to that? In other words, are you making a specific prediction on growth?

Secondly, on Pakistan, can you tell us a little bit about what you're preparing and thinking for an aid package for Pakistan?

MR. KÖHLER: First, to the definition of growth and global recession, I don't think it's the time to discuss and argue about definitions. We will put out our latest forecast, the WEO, next week and the new Chief Economist, Ken Rogoff, will be present and available for your questions.

So I am not precise today with numbers because I want to give him the opportunity to present his numbers. But what I know from the latest discussions is that our forecast will not go below this 2.5 [percent] thing.

Second, Pakistan. You may know that we had been in the process of work with Pakistan last month, and they had a stand-by agreement, and this stand-by agreement worked. So they complied with all the program criteria. That is good.

Based on that and, say, absolutely independently from the events in New York and Washington one week ago, we had foreseen that, if Pakistan would comply with the program, to move possibly to a PRGF [Poverty Reduction and Growth Facility], meaning concessional financing also from the Fund. This has now to be discussed, and in my view, if everything--if there is not a major change, we should go this route because Pakistan had complied in the last month with the stand-by program request.

QUESTION: Mario Platero with Il Sole 24 Ore. On Pakistan, the total debt I think is about $30 billion. There are other countries that probably will come into the picture of taking some role in helping in the situation. We are in a war situation, we are told. Is there going to be a bill at the end of this? In other words, how much--how many resources does the Fund have to, on the one hand, take care of possible systemic problems in the systems of America and to respond to countries such as Pakistan that may go through trouble and need help?

MR. KÖHLER: Well, I think it's premature to talk and speculate about big bills. It's premature. So let us wait and, say, watch developments and decisions, and then we are talking about bills.

Indeed, Pakistan has a debt problem, and part of this PRGF program approach would also be that they should go and discuss with the Paris Club about debt relief from there. So it is certainly a more comprehensive approach that is needed to help the country. But it all depends--and this is not only true for Pakistan but also for other countries--it all depends on the countries themselves. I mean, the cry now for, say, rapid disbursements from the Fund, I'm sure it will come up. That's a natural reaction by people who have tried to take advantage out of a difficult situation.

I said before that the Fund stands ready with its means, with its advice, with its expertise to help countries. But it's always, and also now, the main responsibility of the countries themselves to do the right things and take action.

The liquidity situation of the Fund in my view, or in our assessment, is appropriate. This gives us some comfort. But it's not, say, an announcement of loose money disbursement.

QUESTION: Mr. KÖHLER, Michael Phillips from the Wall Street Journal. The U.S. economy seems to be quite key to the health of the global economy, and consumer spending and business spending in the United States seems to be key to the U.S. economy's success. What makes you think that consumer confidence and business confidence will return at a time like this?

MR. KÖHLER: Well, it's a very difficult question to answer, but, first, I do think that the U.S. citizens as a people, they'll feel a challenge. And, in principle--after this attack--they know that this attack also targeted the economic and financial strength of this nation.

I'm sure that an individual will not consume more in order to fight now the global war against the terrorists. But I'm also sure that they--being challenged as a nation--will not, say, abruptly cut off their behavior. This is one factor. Because I still feel that some basic confidence in this people is strong enough also to withstand this challenge. in this context

But there is another point I want to mention in this context. I think for too long the Europeans, but also the Japanese economic policy people, have underestimated the spillovers from the slowdown in the U.S. And we have the problem of a kind of synchronization of the slowdown. That's certainly a particularly difficult situation.

The response to this situation is now that the Europeans and the Japanese have to know more than ever that they can't, say, rely on relief from the U.S. I mean, up to now that was always--or at least some weeks ago, people in Europe and also in Japan talked a lot about the recovery in the U.S. And this is not bad because we indeed felt and we still feel there will come a recovery in the U.S.

But this recovery in the U.S. will not be the solution alone. Now the Europeans have to understand that it's up to them to demonstrate that they are able and do something to strengthen their growth with their own means. And this is, I think, even helpful because globalization, in my view, doesn't mean in substance that just everybody looks to the U.S.: if it's good, it's good coming from the U.S.; if it's bad, it's coming from the U.S.

The U.S. is a major economy, is a major political power. But globalization means we are interconnected and that also the other regions should feel and respond to their responsibility as appropriate. And I hope that in Europe and Japan this awareness that they now have to demonstrate themselves to take action, not just to wait on improvements from the U.S., will happen.

QUESTION: Paulo Sotero from O Estado de Sao Paulo, Brazil. Mr. KÖHLER, I'd like you to give an assessment about the situation in my part of the world. The Fund had increased its assistance to Argentina on the assumption that Argentina was going to--is going to-- implement a very tough fiscal package, and has also increased its assistance to Brazil under the assumption that--well, to help Brazil fight any contagion from slowdown in the global economy and the Argentina problem.

It looks like this current world situation makes it much tougher for Argentina to achieve its goals, and also this reorientation of capital flows may be--is very problematic for the balance of payment situation of Brazil.

How do you assess the situation? Where do you see things going? Do you see that, for instance, Brazil faces the possibility of a payment crisis because of this change in capital flows? What's your response?

MR. KÖHLER: Well, there is no doubt, Mr. Sotero, that the difficulties have increased for Latin America and Argentina and Brazil. There is no doubt. But I still do think that it's also right here for Argentina and Brazil not to exaggerate pessimism.

In Argentina, it was their response--and it was not the IMF imposition--their response to the situation to create this zero deficit plan. I think it is a bold plan. I think it is a plan that really can demonstrate to markets that they are able to tackle their core problem, fiscal sustainability. It's up to the Argentine system, political system, and people, to demonstrate that they can implement this and deliver. I don't think it is impossible on this basis to get out of the crisis in Argentina. So I do think they should stick to the course they themselves have defined.

We had been forthcoming because we think this should get support. They are not alone, the Argentines. Therefore, we gave them again this support, and you certainly can imagine that it was not just easy. But we thought it's right again to support this effort. But it's now up to them to deliver, and I am not speaking without, say, awareness of how tough this fiscal deficit plan is for the people. It is really tough.

I think President De La Rúa put it this way: This is for us a chance to demonstrate our independence, our national identity.

It's not up to me to judge this, but it was their choice, and we felt we should support this.

Brazil, like Argentina, we should not forget that, has much better fundamentals than five, ten years ago. Their banking sectors are positive. They have done a lot, for instance, in Brazil, with investments, foreign direct investment. It is not the situation that all of a sudden all this is over. And, therefore, I think the Brazilian economic policy [should] stay the course of structural reform, of fostering the competitiveness of their economy, sound fiscal policy. Foreign direct investment will continue to go to Brazil because it's a big country, it's a big number of people. There is potential for growth. And it's now the issue to demonstrate that it's not just talk about this potential but really to resolve to exploit this potential.

I have the feeling that the government of President Cardoso is on this path. And, therefore, we have already, as you know, as a precautionary measure, decided on support financing for Brazil. And I think we are ready. We don't think that Brazil is now at the brink of collapsing. Why should we?

QUESTION: Zanny Minton Beddoes from The Economist. One clarification and two quick questions. The clarification is you said that you thought the U.S. economy would recover by the end of this year. You mean calendar 2001. I just wanted to make sure that was what you meant.


QUESTION: That suggests that you think there will be basically no impact on consumer and business confidence. We're pretty much at the end of the third quarter now. So could I first clarify whether that's really what you meant?

And, secondly, from your answer to the previous question, would it be fair to conclude that in most of your client countries, you are not intending to show any particular leniency given the result of last week events? You suggested very strongly that Argentina had created its own program, that this was Argentina's program, and it needed to do what it needed to do. Would I be right in concluding from that there are no particular plans for leniency given the current events?

QUESTION: On the first question or clarification, indeed, we do think there are--there will be signs of recovery during the course of the fourth quarter, but the fourth quarter is, of course, October, November, December. It's clear that, say, the strengthening of the recovery will be delayed and will move into the next year.

On our policy to countries like Argentina, Turkey, and others: first, again, it is premature now to announce big new programs, premature because it could even further undermine confidence. What is needed is the demonstration of the implementation of the right policies. That is what is needed.

The second thing that is needed is to have better information about the impact of the attack. And only on this basis, an assessment of what is implemented and an assessment what may possibly have worsened, should we sit down and consider what to do, and we are prepared to do that. But to announce now something like we stand ready with billions or further money, it would confuse people.

QUESTION: Michael Phillips from the Wall Street Journal. Has the U.S. Government in any way asked you to start thinking about how much you have available or who in the region that might be affected you could help? In other words, has there been any sort of an approach by the U.S. to say we're going to need a lot of aid going into this area, please be ready?

MR. KÖHLER: We are in close contact with the U.S. Treasury. Anne Krueger and I had our regular breakfast with Paul O'Neill, on Tuesday, I think. We reviewed the situation. We agreed that there is a need for close monitoring of the situation and also thinking what could be done if things are getting worse. But there was no specific request from the U.S. now with numbers or countries to put on top what is already in the pipeline.

But I can tell you that the IMF independently from the U.S. Treasury, or the U.S., is--since months--in a very careful process of monitoring countries. And as you know, this is part of our enhanced vulnerability analysis or, if you want, also our process of early warning information.

So we are, certainly we are prepared to have judgment about countries, and also to have judgment about what is needed to do if there is a situation where a decision has to be taken. But up to now, the U.S. Treasury has not come up with specific requests in terms of numbers.

QUESTION: Mr. KÖHLER, Richard Wolffe, Financial Times. The flip side of that question is: Have you had any discussions--there's been a lot of talk about economic sanctions of one kind or another against countries that do not cooperate with this war against terrorism. Have you discussed anything with the administration about, in some ways, punishing those who don't sign up to this action, or have you studied independently the possibility of such moves by the IMF?

MR. KÖHLER: Well, again, your questions I think certainly are--I can understand it--but it's premature to answer these questions because I think I'm not going too far in saying that still there is not a clear detailed plan from the U.S. about how to react, to act after this attack. They are in the process of working on this plan, and I think it's only normal and right that they do it carefully. And so far there has not been such a precise discussion about things.

But it's also clear that there will be some activity on trying to trace business activities in stock markets. As you know, there is already a lot of activity in fighting money laundering. I do think it is right that the Financial Action Task Force will have a discussion on what to do in the context of this attack.

As you know, the Fund is not a law enforcement agency. We have no police function. So the more concrete issues, for instance, of trying to find out what is behind some sales before they attacked, this has to be mainly a job for the regulatory and supervisory authorities between countries; and in coordinating this, maybe the FATF has a special role. But this has still to be sorted out.

QUESTION: Claus Tigges with the Frankfurter Allgemeine. Mr. KÖHLER, two brief questions. The first one, you mentioned that Europe also needs to take action. Does that also include further monetary easing by the ECB? Or are you at least for the time being satisfied with the 50 basis point cut of Monday? And, secondly, do you expect the U.S. budget situation to deteriorate significantly as a consequence of relief packages or increased defense spending?

MR. KÖHLER: For the ECB, I do think it was a bold, timely decision. We welcome this. It is premature now to ask for further action. It is very important to demonstrate a kind of steady had in this policy and not to demonstrate frantic action. This would be maybe even counterproductive.

But with regard to the prospect of inflation, I don't see a risk in Europe. So if the economy goes down further in Europe, I could imagine there is more room for maneuver from the ECB. But it is up to them to decide, based on their judgment, on their following through on the information and the indicators.

The second thing, the U.S. budget. I must tell you, I am happy that we are now in a situation that we are talking about how--still talking in the U.S. about--how to use a surplus. I mean, I was in Germany when we used to discuss heavily the twin problem in the U.S.--I mean the budget deficit and the current account deficit. Fortunately, we have now--the budget deficit is not an acute problem. The current account deficit is an issue. But, fortunately, the U.S. is in a situation now to have a comfortable budget position.

I think always there has to be, say, a consideration of what will happen in the medium, long term if we take action now with more spending and so on. And the already decided tax cuts certainly in my view are right for right now, but in the medium, long run there has to be an awareness or attention of what its mean for fiscal solidity in the U.S.

But for this time--these months, the next one or two years--I really don't see a budgetary issue as a major constraint for the right economic policy response.

QUESTION: If I can follow up on this question, there has been some discussion, technical discussion about what to do. And there is the idea of adding more money to the $40 billion that has been already approved. One idea is to cut capital gain tax. The other is to give investment credit to corporations--tax credit on investment for corporations. On the Democratic side, there is the idea of increasing the unemployment fund and of cutting the payroll taxes. All of these measures will somehow affect the, of course, budget situation in the U.S.

So in view of this discussion, which ones do you think are more appropriate and--from an economic viewpoint? And do you think that it would be wise to increase the $40 billion package?

And the same, if you can, on Europe. You have mentioned that Europe should review the growth pact on stabilization and should do something about it. Does that mean that they should be more aggressive on deficit spending and review what their targets are, the European countries, I mean?

MR. KÖHLER: First, I don't think it's right in this moment from my side to assess, to judge, to comment on the various ideas on what to do, either in spending or in more tax relief, in the U.S. There has to be a judgment of what is the impact of any further decision on consumer and business confidence. These would be my criteria, and I think we should wait here, and certainly we will have a discussion amongst us here in the Fund. But I should not publicly comment on this now. But I underline that, fortunately, the U.S. has room for maneuver if there is a need to do even more.

The second thing, I didn't say--and I don't want to be seen or interpreted that I gave the advice to the Europeans to review the Stability and Growth Pact. I don't want to be seen in this light. What I am saying is that the implementation of the Stability and Growth Pact should be carefully adjusted to the situation . . . [short interruption to tape]

. . . of the Fund and its role for being a kind of guardian for the global economy, that there should be a demonstration of fiscal discipline, particularly with regard to expenditures, but that there should be not a counteracting measure if revenues are falling short of what had been expected. So we do think it's right to let the automatic stabilizers work.

QUESTION: Are you meeting with--Joe Kahn with the New York Times. Are you meeting with Megawati during her visit to Washington? And, separately, are you considering any sort of fresh aid package or accelerating any work in relation to Indonesia now that her government has taken office there?

MR. KÖHLER: I will meet with her, yes, and I look forward to meeting with her. As you know, our mission was there. We have--the mission has agreed with them on a program, and the Fund Board--I think you chaired it, Anne [Krueger]--agreed on the disbursement of the next tranche. This is $400 or $500 million. There is still available from the program I think around about $3, $3.5 billion. This is what is in the pipeline.

Again, I want to say that I have the feeling there is a bit of too much anxiety now everywhere to spend more and to [have a] kind of loose disbursements. We are very much in favor of supporting the new approach of President Megawati because she has a good team. The team is committed to sound policies. That deserves support. And we are committed to that.

But it's not an issue now to go beyond what we have discussed. If there is a further deterioration, we will take it into account. That's our job. But it's not our job, say, in advance to announce billions of further disbursements. In the end, the policy is decisive, and the policy, the right policy gets our support.

QUESTION: Hiroshi Yoshitsugu of Nikkei Newspaper, Japanese newspaper. You said that Japan should demonstrate a growth path for the end of the year, and in terms of Japanese economy, I think it is--Japan faces very much difficult situation compared to one month ago, our stock market going down, and we see--we only see--only a little bit of progress of that long issues in Japan, and you said that you are very much appreciate financial authorities accepted IMF new assessment program. But I dare say that the Japanese financial authorities are losing market confidence because they don't--you know, they don't disclose good [tape inaudible] to deal with Japanese background issues.

How do you think these situations in terms of Japanese financial authorities and Japanese economies?

MR. KÖHLER: Well, I don't agree with you, if I understood it right, that the Financial Services Agency is not aware and committed to tackle the issue. I had two quite long discussions with Minister Yanagisawa in Tokyo and two weeks ago, I think, here in Washington. The Minister is aware, and he works on that.

It seems to me that there has to be even a bit more resolve to go to the root of the problems, and this is why I offered, and the Minister accepted, our cooperation, based on experts we provide in the context of the Financial Sector Assessment Program.

But I also can tell you this bad loan problem--where we are really eager and ambitious that it is tackled immediately; this is not an issue which can be solved in one or two years. It takes time a bit.

But there should be no misunderstanding. If there is a delay in tackling it, the core problems, then confidence would not come back. And I talked this way with the Minister, and I think we have here a good agreement. He, of course, also wants to be assured that their assessment of the situation is not being seen as not responsible, you see, because markets talk a lot, and markets also sometimes exaggerate. How we find the right balance between exaggeration and the core problem and the right means and measures to solve the problem, that is what has to be worked out.

But I am confident now, after this talk with the Minister, that there is commitment by the authorities to work with us and to tackle the problem. But we will not give up. We will be very clear not to be at the surface, because it's too important here if we--if the Japanese authorities would not, say, have the clear resolve to go to the root of the problems. I think this would even more build up mistrust.

QUESTION: A brief question on a country we haven't covered yet, which is Turkey. Could you characterize what your thinking is on Turkey? Turkey was looking precarious even before this. What do you see the prospects for your program and Turkey in the near future?

MR. KÖHLER: Well, Turkey has an ambitious program. I think they did a lot in the right direction. They did a lot to restructure their banking system. They did a lot to come back to fiscal discipline. But, for instance, particularly high interest rates signal that the problem is not yet solved. And you have seen that, I think in August, second half of August, early September, we had a quite encouraging development with interest rates that came down; and after the attack they jumped up again. This is an issue.

I think here, again, I say it is premature to hear from the newspapers that Mr. Dervis wants more money from the Fund. That's premature. There is a mission in Turkey to review the progress, and when the mission comes back, we will assess the situation.

We have an interest, a clear interest, strong interest, that Turkey makes progress and gets out of this difficult situation. But we want to base our judgment, again, first and foremost, on the delivery by the authorities and, second, also on what are the latest developments. I want to listen and await the report from the mission.

QUESTION: You mentioned the technology and the fact that we have good perspective and increasing productivity, and so on and so forth. But there is a school of thought that also says that we are at the end of an important technological cycle. Doesn't that add to the worry? And what would you say about that?

On a more general basis, is there an evaluation of what the impact of this attack may be on the growth of American economy? People have been talking about 0.5 percent, 1 percent. 0.3 percent. Has the Fund made any calculation, and can you tell us whether that's the case?

MR. KÖHLER: Well, I don't think that we are already at the end of a kind of technological cycle, an upward cycle. It is right that there had been overinvestment, particularly in the U.S., in IT technology. But it's not the end of this technology as a source for growth as we see it.

And, therefore, there is a correction, maybe even a necessary correction, [tape inaudible]. But the potential for product, services, productivity, and in this sense growth is not yet exploited.

And this is particularly true, not least, for Europe. I think Europe can do more to exploit, to take the benefit of new technologies. And it's not only IT technology. I think we are at the beginning also of seeing more potential from biotechnology, communication technology. It's not by far, in my view, yet the end of an upward long-term cycle. And this is one of the reasons why I feel we should not exaggerate pessimism.

The forecast for the U.S., Ken Rogoff, Research Department--

MR. DAWSON: You can come back next Wednesday.

MR. KÖHLER: We'll give you the numbers next week.

MR. DAWSON: Thank you very much.

MR. KÖHLER: Thank you.

[Whereupon, the press briefing was concluded.]