HELSINKI (MNI) – Europe is currently in a tough situation and risks
emanate in particular from Spain and Italy, European Central Bank
Governing Council member Erkki Liikanen said Thursday.

“The European situation is difficult” and policymakers face major
challenges, said Liikanen, who heads the Bank of Finland, at a press
conference to present the bank’s quarterly bulletin with the latest
growth forecasts for the Finnish economy.

With respect to Spain and Italy, he said, “the situation is a
severe risk to the Finnish economy.”

“It is important that Italy continue its economic reform,” he

In general in the euro area, “it is important to address public
deficits and ensure financing of banks simultaneously,” he emphasized.

Liikanen affirmed that “oil prices will decrease in the near
future,” which will have a direct and beneficial effect on inflation.

“Global trade is to rebound at the end of 2012, and this will
affect the Finnish economy positively,” he said.

Frankfurt bureau tel.: +49-69-720142. Email:

[TOPICS: M$X$$$,MT$$$$,MGX$$$,M$$CR$,M$$EC$]