MercoPress. South Atlantic News Agency

Greenspan anticipates modest growth.

Federal Reserve president Alan Greenspan praised the extraordinary resilience of the United States economy and forecasted that the growth rate will quicken, although not as rapidly as anticipated by some analysts.

"It's too premature to make a real assessment of the US economy in the future period", indicated Mr. Greenspan who participated via video link in the International Monetary Conference that is taking place in Berlin.

However Mr. Greenspan said that US productivity growth remains strong and financial markets point towards a recovery in the rest of the year.

The Federal Reserve president statements follow the Department of Commerce latest release regarding the first quarter of 2003 when the US economy expanded 1,9%, (0,3% more than expected) after having grown 1,4% in the last quarter of 2002.

Most US analysts believe that the US economy that managed a 2,4% growth in 2002, will expand 2,1% in the second quarter, 3,5% in the third and 3,8% in the last quarter of 2003. Last April unemployment stood at 6%, but requests, although still high, above 400,000, have began to drop.

Mr. Greenspan emphasized to the Berlin audience that the most important news regarding the US economy is the extraordinary resilience it has shown in the face of the four shocks, burst of the stock market bubble; corporate accounting scandals; September 11 attacks and the war in Iraq.

Mr. Greenspan said that if some extraordinary flexibilities had not being incorporated to the system such as deregulation, global competition, and tax cuts, "it's not conceivable that we could have overcome the impacts we've been through since 2000".

However Mr. Greenspan warned about what he described as "corrosive deflation", when prices fall steadily and the economy remains stagnant, and since "it's something we know so little about, ?.we need to ensure ourselves against it".

The Federal Reserve president also praised the ten year 350 billion US dollars program to cut taxes that he described was done "at the right time".

But he also anticipated huge budget deficit problems in the future, and demanded sharp cuts in government spending.