The Eurozone Economy
The 12-nation Eurozone has seen it’s highest economic growth in 6 years. The first 6 months of 2006 ended in 3.4% growth. Domestic demand is one of the causes of the higher growth, as well as lower oil prices. Expected growth for the entire year is estimated at 2.5%. The Eurozone’s 2 largest economies, Germany and France are recovering from years of low growth rates. The Dutch economy is also expanding steadily.
Growth in the 12-nation eurozone is now forecast at 2.5 percent in 2006, 0.4 percentage points above the spring forecast.
Further ahead, however, the report warns of downside risks, in particular equity price turbulence in late spring indicates “that risks to growth related to the macro-financial environment have intensified”.
Structural reforms and wage moderation within the 12 nations that use the euro currency have boosted the economy’s employment performance.“Nevertheless, there is scope to further improve the functioning of labour markets. That past efforts are paying off should encourage further steps in the right direction,” the Commission said.
Buttressed by a strong rebound in private investment, domestic demand took over as the main source of strong growth. With the recent ebbing of oil prices and the gradual firming of the labour market, prospects for private consumption, a particularly weak spot in the euro area in recent years, are also improving, according to the report.CLICK HERE FOR THE FULL ARTICLE AT EUBusiness.
Administrator @ October 2, 2006