BRUSSELS, April 12: A rise in interest rates, the euro and oil prices might slow expansion of the eurozone economy this year, the European Commission said on Wednesday, trimming back its growth forecasts.

The commission said that it expected the eurozone economy to grow by 0.4-0.8 per cent in the first quarter, 0.3-0.8 per cent in the second quarter and 0.2-0.8 per cent in third quarter.

Last month, the commission’s forecasters had estimated that the economy of the 12 countries sharing the euro would grow by 0.4-0.9 per cent in the first, second and third quarters.

Despite the downward revision, the forecasts would mark an improvement from weak growth in the final quarter of 2005.

Data published separately by the EU’s Eurostat data agency showed that growth had eased to only 0.3 per cent in the fourth quarter from 0.7 per cent in the previous quarter.

The European Central Bank said in its monthly bulletin for April that the weak end to 2005 was probably just a blip.

The decline in real GDP growth in the fourth quarter of 2005 is very likely to have been temporary, partly reflecting a correction from the unexpectedly strong growth recorded in the previous quarter, the ECB said.

Eurostat said that the eurozone economy grew 1.8 per cent in the last quarter of 2005 from the same period in 2004, revising slightly higher from an earlier estimate of 1.7 per cent.

But for the whole of 2005, Eurostat stuck with an earlier estimate that the eurozone economy grew 1.3pc, slowing from a rate of 2.1pc in 2004.—AFP