Eurozone economic growth slows to 3.0pc annually in Q1

June 03, 2007 00:00:00

BRUSSELS, June 2 (Xinhua): The eurozone economy grew by 3.0 per cent from twelve months ago in the first quarter this year, slower than in the previous quarter, the European Union's statistics bureau Eurostat said yesterday.

The year-on-year growth rate in the 13-nation bloc sharing the same currency was 3.3 per cent in the fourth quarter of 2006, when last year saw the fastest expansion in six years.

On quarterly basis, the eurozone economic growth eased to 0.6 per cent in the first quarter after hitting 0.9 per cent in the final quarter of last year, the Eurostat said.

The growth was mainly driven by strong investment. Compared with the previous quarter, eurozone investments rose by 2.5 per cent in the first three months this year. Exports and imports increased by 0.3 per cent and 1.6 per cent respectively, while household final consumption expenditure decreased by 0.1 per cent.

The combined economy of 27 EU member states also slowed down in the first quarter to 3.2 per cent year-on-year. It was 3.5 per cent in the previous quarter. Quarter-on-quarter, the EU economy grew by 0.6 per cent, down from 0.9 per cent in the fourth quarter of last year.

The slow-down was widely expected at the beginning of this year as a value-added tax rise of three percentage points was introduced in Germany, which brought down consumption in the European largest economy.

In the first quarter of 2007, economic growth in Germany cooled to an annual rate of 3.6 per cent from 3.9 per cent in the previous quarter. France and Britain, the other two major economies in the EU, also slowed down slightly.

Despite slow-down, analysts said both the eurozone and EU economies are set to rebound later this year, as Germany's rapid recovery from tax rise has already beaten expectations.

European economy started this year at a faster pace than the United States and Japan, the other two major economies. On yearly basis, the US economy increased by 1.9 per cent in the first quarter, and Japan 2.2 per cent.

The European Commission last month raised its economic forecasts for both the eurozone and the EU, due to a boost in investment and household spending. According to the spring forecasts, the eurozone economy will grow by 2.6 per cent in 2007 and 2.9 per cent for the EU.