Friday, July 11, 2003
EU forecasts anemic growth for euro area in Q2, Q3
Associated Press Brussels, July 10
The European Union on Thursday reiterated its forecast of growth between zero per cent and 0.4 per cent in the second and third quarters for the 12 countries using the euro.
While "some recent confidence indicators have shown a slight improvement," most continue to suggest slow growth, the EU's executive commission said. Economists had expected the same forecast or a downward revision. That's because manufacturing activity has dropped in France and Germany and the jobless rate is rising, dampening consumer spending. The European Central Bank's recent interest rate cut, to two per cent, is expected to help the euro-zone economy improve slightly in the second half.
The commission is predicting about 0.7 per cent annual growth in 2003. Private economists are a bit more conservative, with Societe Generale forecasting a mere 0.3 per cent.
"We're just starting to get our head out of the water, but only our hair," said Murat Totrak, an economist at Societe Generale in Paris, before the forecast was released.
Also on Thursday, the EU's statistics office said gross domestic product in the euro-zone rose 0.1 per cent in the first quarter. Private consumption was still growing, but investments and exports decreased, Eurostat said. The figure was the same when the three countries not using the euro -- Britain, Sweden and Denmark, were included, it said.
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