The euro zone economy grew at its fastest quarterly pace in three years in the first quarter
of this year and could expand even more quickly in the months ahead, according to reports published this morning.
The bloc grew by 0.6 per cent in the first three months of 2004 compared with the previous quarter and by 1.3 per cent from a year earlier, EU statistics agency Eurostat said.
That beat consensus forecasts, even after they had been revised up in the light of national data. It was the fastest quarterly growth rate since the first quarter of 2001 and the best annual showing since the third quarter of the same year.
Although record oil prices are causing some economists to worry about the outlook for euro zone growth and inflation, a European Commission model, which forecasts quarterly change in euro zone gross domestic product, said growth might even pick up further.
It predicted the euro zone economy would grow by between 0.3 and 0.7 per cent in the second quarter, unrevised from an earlier release, and by between 0.4 and 0.8 per cent in the third quarter, higher than a previous forecast of 0.3 to 0.7 per cent.
"It's a positive reading. It suggests growth has remained relatively upbeat," said Mr Mitul Kotecha, head of global foreign exchange research at Calyon in London.
"The concern is whether this has been generated by external factors and global growth or whether there is domestically led growth in Europe and the risk is that a lot of this growth is coming from the external side."