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Last Updated: Monday, 18 December 2006, 17:14 GMT
Eurozone 'to withstand world dip'
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Eurozone growth is not stellar, but it is seen staying strong and steady
The Eurozone economy is strong enough to withstand weaker US growth, higher German taxes and a dip in exports next year, the European Commission has said.

The eurozone contains the 12 nations using the single European currency and is forecast to grow by 2.6% this year.

Growth will slow in 2007, though the Commission said it would remain robust as negative effects would be limited.

Countering the global problems would be strong domestic consumer demand and improved corporate spending, it added.

Oil price decline

Analysts said that efforts by main eurozone nations including France, Germany, and Italy to free up their labour markets and reduce state spending were bearing fruit despite the fact that many reforms were needed.

At the same time, interest rates were not high enough to hamper growth, and inflation risks were diminishing thanks to a decline in the price of oil, they added.

The European Central Bank raised its main interest rate to 3.5% this month.

Figures released earlier this year showed that eurozone economic growth in the three months to the end of September slowed to 0.5% from 0.9% in the previous quarter.

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