Eurozone economy makes good start in 2007
Thursday, 5 July 2007
BRUSSELS, July 4 (Xinhua): The eurozone economy started 2007 on a healthy footing, the European Commission said in a report yesterday, denying the euro's rise was hurting exports significantly.
The eurozone achieved an annual growth rate of 3 per cent in the first quarter, lower than the 3.5-per cent growth rate in the previous quarter but still a quite good performance, the Commission said in its quarterly report on the 13-nation bloc sharing the same currency.
The robust economic growth was mainly spurred by strong domestic demand, particularly investment, though consumption contracted slightly and exports growth decelerated in the first three months.
It had been widely expected that household consumption would decline since Germany, the largest economy in the eurozone, raised its value-added tax at the beginning of this year. But the Commission said consumption, one important economic booster for the eurozone, is set to recover as consumer confidence is approaching an all-time high, a sign that EU shoppers will spend more later this year.
Meanwhile, inflation remained broadly stable at around 1.9 per cent, slightly below the 2 per cent ceiling set by the European Central Bank (ECB) to maintain price stability.
The ECB, still concerned about mid-term inflation pressure, raised its benchmark interest rate by another quarter percentage point to 4 per cent early last month, and it was expected to make further move in the third quarter.
The quarterly report agreed with the ECB that although the short-term inflation outlook remains benign, with price expectations well anchored, imported inflation still tame and unit labour costs progressing slowly, some inflation risks may materialise as the cycle matures.
In the first quarter, the eurozone employment expanded by 0.4 per cent, with more than half a million jobs created. The latest figure showed that the jobless rate kept declining to a record low of 7.0 per cent in May, almost a full percentage point lower than a year ago.
The eurozone achieved an annual growth rate of 3 per cent in the first quarter, lower than the 3.5-per cent growth rate in the previous quarter but still a quite good performance, the Commission said in its quarterly report on the 13-nation bloc sharing the same currency.
The robust economic growth was mainly spurred by strong domestic demand, particularly investment, though consumption contracted slightly and exports growth decelerated in the first three months.
It had been widely expected that household consumption would decline since Germany, the largest economy in the eurozone, raised its value-added tax at the beginning of this year. But the Commission said consumption, one important economic booster for the eurozone, is set to recover as consumer confidence is approaching an all-time high, a sign that EU shoppers will spend more later this year.
Meanwhile, inflation remained broadly stable at around 1.9 per cent, slightly below the 2 per cent ceiling set by the European Central Bank (ECB) to maintain price stability.
The ECB, still concerned about mid-term inflation pressure, raised its benchmark interest rate by another quarter percentage point to 4 per cent early last month, and it was expected to make further move in the third quarter.
The quarterly report agreed with the ECB that although the short-term inflation outlook remains benign, with price expectations well anchored, imported inflation still tame and unit labour costs progressing slowly, some inflation risks may materialise as the cycle matures.
In the first quarter, the eurozone employment expanded by 0.4 per cent, with more than half a million jobs created. The latest figure showed that the jobless rate kept declining to a record low of 7.0 per cent in May, almost a full percentage point lower than a year ago.