Eurozone economy beats forecasts

Germany's economy is expected to slow this year

Eurozone gross domestic product (GDP) is rising at a faster rate than expected.

It went up 0.6% in the first three months of 2001, up from an earlier estimate of 0.5% and slightly above analyst forecasts, according to figures released on Friday.

But the picture for the whole year could be more subdued, as the area's biggest economies are affected by a slowdown in the global economy.

The eurozone economy grew 0.6% in the last quarter of 2000.

Industry

Eurozone growth in the first quarter of 2001 was pushed up by a good performance in the industry sector despite a drop in investment and imports, data released by the European Union's statistics office showed.

On a year-on-year basis, GDP was up 2.6%, revised upwards from a first estimate of 2.5%.

But it stood below a 2.9% increase seen in the last quarter of 2000.

The 2000 data do not include Greece, which joined the single currency in Janaury 2001.

First quarter GDP growth in the 15-nation European Union grew 0.5% quarter on quarter and 2.6% year on year.

The data showed private consumption rose 0.4% in the first quarter, up marginally from 0.3% in the last quarter of 2000.

The eurozone data came shortly after the Dutch Central Bureau of Statistics said it had revised its forecasts for Dutch GDP growth in the first quarter to 1.6%, its lowest in more than seven years, against a previous estimate of 2%.

French growth slows

On Wednesday, the International Monetary Fund (IMF) said the French economy, the second biggest in the eurozone, should grow 2.3% this year, sharply down from an expansion of 3.4% in 2000.

Things were not looking better in Germany, Europe's largest economy, where the IMF predicted GDP to grow a mere 1.25% this year.

European economic affairs commissioner Pedro Solbes said in June he expected the eurozone's economy to grow about 2.5% this year, but said much would depend on the performance of the US economy.

In its April economic report, the European Commission forecast eurozone economic growth at 2.8% in 2001.