FRANKFURT, Dec 1: The European Central Bank said on Thursday it was revising upwards slightly its eurozone growth forecasts for 2005 and 2006 to 1.4 per cent and 1.9 per cent respectively Previously, the bank had been pencilling in eurozone growth of 1.3 per cent this year and 1.8 per cent next year.

“Recent data and survey evidence indicate that economic activity has strengthened in the second half of this year,” ECB chief Jean-Claude Trichet told a news conference here after the guardian of the euro raised its key interest rates for the first time in five years to keep area-wide inflation in check as the emerging economic recovery gathers pace.

According to an initial estimate by the EU’s statistics authority, Eurostat, real gross domestic product (GDP) growth picked up to 0.6 per cent in the third quarter of this year from 0.4 per cent in the second quarter and 0.3 per cent in the third quarter.

“Moreover, the information on business confidence broadly remains consistent with continued economic growth towards the end of the year,” Trichet said.

“Looking ahead, ongoing growth in global demand should support euro area exports,” the Frenchman said.

And “on the domestic side, investment should benefit from continued favourable financing conditions and the robust growth of corporate earnings.”

Private consumption, regarded as the Achilles’ heal of euro-area recovery, “should grow broadly in line with expected developments in real disposable income”, Trichet continued.

Nevertheless, “the outlook for economic activity remains subject to downward risks, relating mainly to higher than expected oil prices, concerns about global imbalances and weak consumer confidence,” he cautioned.—AFP