Hello and welcome to the Global Forecast from the Economist Intelligence Unit. I'm Tony McMahon and I'm joined this month by Robert Ward.

Recently, of course, the USD has been strengthening from a position of weakness. This is not surprising given what's going on with the eurozone.

We think it's going to average about 1.19 against the EUR, possibly with some overshoot up perhaps to 1.10 or so. But even if USD does get more stronger against the EUR, we don't expect that to be maintained.

Don't forget, as I said, it is a parade of the ugly sisters. The US does have issues as well with fiscal problems and structural issues as well. So once the EUR issue is sorted, the markets will focus back on the USD.

What this means for eurozone rates, well we pruned our eurozone policy rates back for the longer term. By 2014 we don't expect the ECB rate to go much above 3 per cent, which, of course is, historically speaking, is quite low. We don't expect any increase in the ECB rate until about 2012.

With the weaker countries really struggling so badly, I think even though Mr Trichet would love to raise interest rates because he is a hawk, I think he is going to find it rather difficult.

So pretty much low interest rates for Europe over the short-term.

Austerity clearly will take its toll on private consumption. Perhaps on investment as well. But don't forget the EUR is now weak. Perhaps set to go weaker still and this will give a nice offset, if you like, to the stronger exporting countries.

Germany will clearly benefit. Germany is very plugged in to the emerging market story which is obviously a very good one at the moment. Countries like the Netherlands, countries like Austria, even Italy will benefit from this weaker EUR, so some offset there, but we still don't expect the eurozone as a whole to really do much better than about 0.7 per cent in terms of growth this year and pretty much the same next year.

So not a disaster, but really quite uninspiring in the round.