Eurozone economy slows down in Q2 as investment drops
Thursday, 6 September 2007
BRUSSELS, Sept 5 (Xinhua): The Eurozone economy slowed in the second quarter of this year mainly due to declining investment and sharp drop in the construction sector, the European Union's statistics bureau Eurostat said yesterday.
Economic growth in the 13-nations that share the same currency, narrowed to 0.3 per cent in the second quarter after a quarterly increase of 0.7 per cent in the first three months. It was the slowest pace in a year.
Compared to a year ago, Eurozone economy grew by 2.5 per cent in the second quarter, down from 3.2 per cent in the previous quarter.
The figures were in line with Eurostat and economists' estimates. Analysts said the economic slowdown was mainly due to declining investment and a sharp drop in the construction sector.
Investment decreased by 0.2 per cent in the second quarter after expanding two per cent in the first quarter while construction activity in the construction sector shrank by 1.6 per cent after increasing 1.9 per cent.
Meanwhile, domestic demand became the main driver of economic growth, with household consumption up by 0.5 per cent after a standstill in the first three months. Despite the appreciation of euro, the Eurozone recorded strong exports in the second quarter, which increased by 1.1 per cent, up from 0.8 per cent in the first quarter.
GDP growth dropped more sharply than expected in Germany and France, the two largest economies in the Eurozone, with both slowing down from 0.5 per cent to 0.3 per cent.
In Germany, exports remained strong but investment in the construction sector fell, while economic slowdown in France was mainly due to unsound business investment and increasing trade deficit.
Economists said the economic slowdown may persuade the European Central Bank to keep the Eurozone benchmark interest rate intact this week, while others expected the Eurozone economy to gather strength in the second half of this year.
The European Commission estimated the Eurozone economic growth in the third quarter would be among the range of 0.3-0.8 per cent, 0.2-0.8 per cent in the fourth quarter, and 0.2-0.9 per cent for the first quarter of 2008.
In the 27-nation EU, GDP growth also slowed to 0.5 per cent in the second quarter from 0.7 per cent in the first quarter.
Economic growth in the 13-nations that share the same currency, narrowed to 0.3 per cent in the second quarter after a quarterly increase of 0.7 per cent in the first three months. It was the slowest pace in a year.
Compared to a year ago, Eurozone economy grew by 2.5 per cent in the second quarter, down from 3.2 per cent in the previous quarter.
The figures were in line with Eurostat and economists' estimates. Analysts said the economic slowdown was mainly due to declining investment and a sharp drop in the construction sector.
Investment decreased by 0.2 per cent in the second quarter after expanding two per cent in the first quarter while construction activity in the construction sector shrank by 1.6 per cent after increasing 1.9 per cent.
Meanwhile, domestic demand became the main driver of economic growth, with household consumption up by 0.5 per cent after a standstill in the first three months. Despite the appreciation of euro, the Eurozone recorded strong exports in the second quarter, which increased by 1.1 per cent, up from 0.8 per cent in the first quarter.
GDP growth dropped more sharply than expected in Germany and France, the two largest economies in the Eurozone, with both slowing down from 0.5 per cent to 0.3 per cent.
In Germany, exports remained strong but investment in the construction sector fell, while economic slowdown in France was mainly due to unsound business investment and increasing trade deficit.
Economists said the economic slowdown may persuade the European Central Bank to keep the Eurozone benchmark interest rate intact this week, while others expected the Eurozone economy to gather strength in the second half of this year.
The European Commission estimated the Eurozone economic growth in the third quarter would be among the range of 0.3-0.8 per cent, 0.2-0.8 per cent in the fourth quarter, and 0.2-0.9 per cent for the first quarter of 2008.
In the 27-nation EU, GDP growth also slowed to 0.5 per cent in the second quarter from 0.7 per cent in the first quarter.