Euro zone posts economic growth of 0.8% in Q1

| May 13, 2011 | 0 Comments

Official figures have today revealed the 17-member euro zone economy grew by 0.8% in the January to March period – up from 0.3% in the previous quarter.

Germany, which is the largest economy in Europe, grew by 1.5%, while France reported growth of 1%.

Other good performers were Estonia, growing by a staggering 2.1% but Portugal, which is currently negotiating a bailout, re-entered recession.

Greece, meanwhile, which is also considered one of the weaker euro zone nations, surprised analysts with growth of 0.8%.

The growth figures come shortly after the International Monetary Fund (IMF) warned that the euro zone debt crisis could still spread, despite bailouts for Greece, Ireland and Portugal.

A report by the IMF said: “Contagion to the core euro area, and then onwards to emerging Europe, remains a tangible downside risk.”

Meanwhile, the Fund is urging the European Central Bank (ECB) to refrain from lifting interest rates further.

Last month, the ECB raised interest rates from 1% to 1.25% – the first time in almost three years in a bid to fight inflation. However, the IMF has said euro zone monetary policy could “afford to remain relatively accommodative”.

Finally, the Fund is predicting economic growth of 1.7% this year for the euro zone – provided debt crisis do not damage the 17-member nation.

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