(by G. Andersen)

Global recovery has become stronger and more sustainable, said Federal Reserve Chairman Alan Greenspan in written responses to questions submitted to him on July 20 before the Senate Banking Committee and made public on Tuesday.

"Growth has strengthened in every major region compared with the sluggish performance during the first half of 2003, and recent indicators suggest that the foreign economies continue to put in a favourable performance," he said.

Greenspan underlined euro zone sluggish recovery “with particularly weak activity in Germany.” As for Japan, its activity was slowed by a decade of stagnation, though with the rudiments of last year growth. Its slow-down is sure to contain risks for Japanese economy as Japan is entirely dependent on imported oil with rising oil prices up to $49 per barrel.

He also mentioned jeopardy of home prices rise in some metropolitan areas that have shot up at such a pace that they constitute a "bubble" and can burst “to the detriment of owners and the broader economy”. As mortgage rates remained very low for quite a time it is difficult for policy-makers to get a clear measure of home-price rises, he noted.

"As in the case with other asset prices, we monitor real estate prices closely in developing our economic outlook," he added.