Two different reports published on Monday suggest European economic growth is solidly based and looks set to beat forecasts, at least in the short term. The European Commission’s quarterly analysis says internal demand is now the key growth driving factor, and this growth could hit two and a half percent this year after last year’s more modest one point three percent. As long as oil prices remain weaker and unemployment continues to fall, there is little to cloud the present picture concludes the Commission.
However it warns that failure at trade talks currently underway at the WTO’s Doha round negotiations could lead to a resurgence of protectionism, and a sharp correction. The Royal Bank of Scotland/NTC survey of Eurozone purchasing managers also shows faster rates of growth in new orders and employment, and new export orders. However input costs are creeping up again despite the fall in energy prices, although inflation dropped to a three-year low.