BRUSSELS, June 1: The eurozone economy got off to a sluggish start to this year, EU data released Wednesday showed, providing further evidence that a long-awaited recovery is running out of steam. The eurozone economy grew 0.5 per cent in the first three months of the year from the previous quarter, bringing the increase over one year to 1.3pc, data from the EU’s statistics agency Eurostat showed.
The first quarter figure, which was unchanged from an initial estimate, met analysts’ forecasts and marked a pickup from a 0.2-percent growth rate booked in the previous quarter. In the broader 25-nation EU, growth is faring only marginally better with the economy also growing 0.5 per cent in the first quarter on a quarterly basis but 1.6 per cent on a yearly basis.
CIB economist Luca Silipo said the 0.5 per cent figure for the eurozone “hides asymmetric developments” in the bigger economies in the 12-nation area, pointing to “strong growth in the first quarter in Germany and Spain, slightly disappointing in France and plunging in Italy”.
Looking ahead, the EU’s executive commission predicted the eurozone economy was likely to remain fragile. It estimated the economy would grow in a range from 0.1 per cent to 0.5 per cent in the second quarter from the previous quarter trimming back its forecast by 0.1 percentage point.
In the third quarter, the eurozone economy would grow 0.2-0.6 per cent, the commission forecast. Although the data came as no surprise, they provided further evidence that the eagerly awaited recovery in growth is proving much weaker than expected.
Only two months ago, the European Commission forecast that the eurozone economy would grow 1.6 per cent this year, which was already a downward revision from an earlier 2 per cent estimate. But most economists have lower forecasts and the commission will probably have to cut back its estimate as well.
The European Central Bank (ECB) has cut its forecast for eurozone 2005 growth to 1.4 per cent from 1.6 per cent previously, central bank sources said ahead of the release of ECB estimates on Thursday.—AFP
