Eurozone growth estimate revised down to 0.5%

13 May 2016

The official second estimate of eurozone growth has been revised slightly down from 0.6 per cent to 0.5 per cent in the first quarter of the year.

The data, from the Eurostat agency, also revised slightly downward the annual GDP estimate to 1.5 per cent from 1.6 per cent.

However, according to the agency, the vast majority of the 19-country bloc that used the euro had experienced higher growth.

Though Latvia and Greece saw the growth fall, the biggest economy, Germany more than doubled its growth rate.

The German economy grew 0.7 per cent between January and March, as against 0.3 per cent in the final quarter of 2015.

Annual growth was estimated at 1.3 per cent against what was recorded a year ago.

Germany's trade surplus declined after imports grew more quickly than exports over the period thanks to strong domestic demand.

Meanwhile, French GDP was up 0.5 per cent and Italy, the third largest economy, grew at 0.3 per cent, while Spain expanded by 0.8 per cent.

The economies of Greece and Latvia contracted  0.4 per cent and 0.1 per cent respectively. Outside the eurozone, the economies of Hungary and Poland also shrank in the first quarter.

The German economy, Europe's largest had traditionally been export-led but in recent times had been fueled increasingly by domestic demand. That trend was  underlined in today's report.

According to the Federal Statistical Office, private and government spending along with investment in equipment and construction, had increased, with the latter being helped by relatively mild winter weather. Foreign trade weighed slightly on growth, with imports increasing more than exports.

The government predicts growth of 1.7 per cent in gross domestic product this year, the same as last year.

"Today's data are another sign of Germany's economic strength - at least at first glance," said Carsten Brzeski, an economist at ING-DiBa in Frankfurt, AP reported. "The economy defied the financial market turmoil at the start of the year as well as the Chinese slowdown."

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