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29th Mar 2024

Eurozone growth highest in six years

The eurozone registered its strongest growth in six years, according to official statistics released by the EU statistical office on Monday (14 August).

The economy of the 12-nation zone grew by 0.9 percent in the three months to June, its fastest rate since 2000.

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  • Some economists are sceptical about whether the growth will last (Photo: EUobserver)

The bloc sharing the euro also pulled ahead of the US and Japan and surpassed a European Commission growth projection for the period. Brussels had projected 0.4 to 0.8 percent growth.

The commission on Monday revised upwards its growth forecast for the current quarter - ending in September - upwards to between 0.5 and 0.9 percent.

The latest statistics also revealed strong economic performances in the EU's two biggest economies - Germany and France.

Germany registered a 0.9 percent growth compared to the first quarter of the year while France saw an even bigger economic expansion at 1.2 percent.

Spain and the Netherlands also saw good economic performances registering 0.9 and 1.0 percent growth respectively.

However, Italy remained weak in comparison with 0.5 percent growth.

The Financial Times quotes economists cautioning that the eurozone could be hit in coming quarters by a slowing US economy and higher eurozone interest rates.

"Have we broken out of the phase of sluggish growth? Yes, unambiguously. Will it last for ever? No," said Ken Wattret, economist at BNP Paribas, quoted by the newspaper.

For its part, the commission predicts a slowing of growth for the eurozone in the coming months forecasting 0.5% to 0.9% for the third quarter of 2006 and 0.4% to 0.9% for the fourth quarter and 0.2% to 0.8% for the first quarter of next year.

The economy of the whole of the 25-nation EU also expanded 0.9 percent in the second quarter and 2.6 percent over one year.

Eurozone creating jobs faster than US

Employment in Europe appears to be on the up with new jobs being created at a faster rate than in the US - Germany and France are leading the economic growth.

'Swiftly dial back' interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

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