Euro area economic growth slower but still robust, says EU
Brussels (dpa) - Eurozone economies slowed down slightly during the third quarter of 2006 but growth still remained robust across the 12-nation currency zone, the European Commission said Monday.
The commission - the European Union's financial watchdog - said recovery in the euro zone was broad-based and sustainable, with domestic demand emerging as the mainstay of economic expansion.
"The euro area is therefore well placed to face a somewhat less favourable international environment deriving from the US slowdown," the commission said.
Euro area Gross Domestic Product (GDP) grew by 0.5 per cent in the third quarter of 2006 and by 2.7 per cent on a year-on-year basis. Second quarter 2006 growth in the euro zone was estimated at 1 per cent.
"This slight deceleration compared with the first half of the year should not mask the fact that all domestic components continued to expand at a robust pace," the commission said, adding that household consumption was particularly buoyant, underpinned by strong employment gains and high consumer confidence.
After an unusually strong 2006 second quarter, investment decelerated but continued to expand at a solid pace and business confidence remained remarkably high, it added.
The commission said recent developments were consistent with the earlier forecasts putting euro area average growth at 2.6 per cent for 2006, the best performance in 6 years.
Looking ahead, the EU executive said some deceleration in growth was expected for 2007, reflecting the effects of an increase in value added tax in Germany and a somewhat less favourable international environment.
However, an expected US slowdown would have only a small impact on euro zone development because the European recovery was based on internal demand, the commission said. // © 2006 DPA
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