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UPDATE 1-ECB's Weber warns of euphoria as Germany grows-TV

Published 08/21/2009, 01:09 PM
Updated 08/21/2009, 01:12 PM

* Sees slightly better 2010, Buba may revise expectations

* Too early to say "everything is behind us"

* Unlikely growth to return to old levels over next decade

* Can talk over next year of support measure phase-out

(Adds detail, background)

FRANKFURT, Aug 21 (Reuters) - It would be a mistake to get too optimistic about the German economy, despite recent positive signs, European Central Bank Governing Council member Axel Weber said on Friday.

"The steep downturn of the German economy has been halted, there are signs of stabilisation," Weber, who also heads the German Bundesbank, told CNBC television in a television interview from Jackson Hole in the United States.

"But don't get too optimistic yet ... it is too early to draw the conclusion that everything is behind us, we just reached the bottom."

But Weber also said the second half of the year would be quite positive in Germany, with a return to growth due to economic stimulus measures.

Germany posted a surprise 0.3 quarter-on-quarter rise in gross domestic product in the April-June period, showing that Europe's biggest economy had exited its longest recession since World War Two.

The Bundesbank might revise its expectations for 2010 economic growth slightly upwards but the recovery could be bumpy, Weber said, adding that he sees trend growth down and that he is not too optimistic on long-term growth prospects.

"It is unlikely that we will within the next decade return to the kind of growth rates we have seen in the last five or six years on trend," Weber said.

Weber also said it was too early now to start withdrawing policy support but discussing withdrawal could soon start.

"I think over that the next year we can talk about successively phasing out some of these measures and it will really much depend on how the economy is going," Weber said.

He said that the ECB would at some point separate liquidity and interest rate measures, but he did not specify the time. (Reporting by Sakari Suoninen; editing by Patrick Graham)

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