The world economic recovery is continuing at a slightly more subdued pace. In the U.S.A., weaker consumer spending contributed to a slowdown in growth momentum. At the end of June 2004, the Federal Reserve abandoned its low interest rate policy and has since increased base rates by 50 basis points. In Asia, Japan's economy is back on the road to recovery and China's and Southeast Asia's high growth rates are by and large still on course. Economic recovery in the euro area continued, albeit with marked divergences between countries. Growth is currently being fueled by external demand, in particular. The latest increase in crude oil prices triggered a rise in inflation. The ECB's projections paint a relatively upbeat picture of anticipated GDP growth. Although the outlook for price stability has deteriorated in the current climate of higher crude prices, in the medium term the price stability target will most probably be met. In Central and Eastern Europe, the economy continues to grow at a more dynamic pace than in the former EU-15. The new EU Member States countries are now endeavoring to implement the next step of integration — the introduction of the euro.
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