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Wednesday 23rd of February 2011
September 13, 2010    

EU upwardly revises 2010 growth forecast

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by Kay Murchie
EU upwardly revises 2010 growth forecast

It appears the European Commission is optimistic about the euro zone’s growth prospects after lifting GDP forecasts.

According to the Commission, growth of 1.8% in the EU for 2010 is expected - slightly higher than its previous estimate of 1%.

Meanwhile, for the 16-member euro zone, it is forecasting growth of 1.7% - up from the 0.9% previously forecast.

However, despite the lift in growth forecasts, the Commission said the recovery remained fragile.

“While activity is still expected to moderate in the second half of the year, the outlook is for a slightly improved quarterly profile compared to the spring forecast, due to the spill-over of some momentum from the second quarter,” it said.

EU Economic and Monetary Affairs Commissioner Olli Rehn added: “We have started scoring again, but there is no reason to shout for victory. We must remain alert and vigilant.”

The revised growth forecast comes as Germany, which is Europe’s largest economy, experienced strong growth - boosted by exports.

Germany’s statistics office, Destatis, recently revealed the economy grew by a record 2.2% in the second quarter – the fastest quarterly growth in 20 years.

The figures smashed analysts forecasts who had expected growth of around 1%. Meanwhile, on an annul basis, economic growth soared by 4.1%.

Export demand helped to bring Germany out of recession in the second quarter of last year – much sooner than many of its counterparts throughout the world.

In related news, the European Central Bank (ECB) recently lifted its growth projections for the euro zone.

The ECB raised its forecast for GDP to between 1.4% and 1.8% for 2010, and between 0.5% and 2.3% in 2011.

Explaining the revision earlier this month, ECB president, Jean-Claude Trichet, said: “Euro area real GDP grew strongly on a quarterly basis, increasing by 1.0% in the second quarter of 2010, supported by ongoing growth at the global level but also in part reflecting temporary domestic factors.”

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