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Euro zone growth gulf widens

Euro zone growth gulf widens
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Powerful performances by the German and French economies propelled growth in the euro zone well above forecasts in the first three months of the year.

But the figures also underscored the yawning gap between the currency bloc’s strong and weak countries.

Overall the euro zone economy grew 8.0 percent from the previous quarter.

Germany’s GDP grew by 1.5 percent and France’s by 1.0 percent, driven in part by consumer demand. The big surprise was Greece with 0.8 per cent growth. Spain managed 0.3 percent expansion, but Portugal slipped back into recession with a 0.7 percent contraction. In the early part of the year, Italy was another laggard growing by just 0.1 percent.

Germany and France account for nearly half the region’s gross domestic product.

At the same time, experts at the European Commission forecast quarter-on-quarter growth in the euro zone would slow to 0.4 percent between April and June before stabilising at 0.4 percent for the next two quarters.

The split nature of the region’s economies demonstrated the difficulties facing the European Central Bank which raised interest rates for the first time in two years last month to fight inflation. It is expected to put them up again in July.