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Thursday 03rd of March 2011
March 1, 2011    

Commission raises euro zone economic growth forecast

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by Kay Murchie

The European Commission today said the 17-member euro zone economy will grow at a better than expected rate this year.

The upbeat statement comes as the Commission said there are “better prospects for the global economy” and positive “EU business sentiment.”

Economic and Monetary Affairs Commissioner Olli Rehn said the euro zone is expected to expand 1.6% this year - slightly higher than November’s projection of 1.5%.

“While exports should continue supporting the recovery, a rebalancing of growth towards domestic demand is expected for 2011, resulting in more sustainable growth,” Mr Rehn said in a statement.

However, he cautioned that the recovery remains “uneven”, particularly as many member states were going through “a difficult phase of adjustment.”

In the meantime, the Commission expects inflation for the region to remain close to the 2% target - it currently stands at 2.3%, according to European Union’s statistics office Eurostat.

In other news today, the euro zone’s manufacturing sector grew at the strongest pace for more than a decade in February, fuelled by a record expansion in Germany.

Markit’s euro zone manufacturing purchasing managers’ index, rose to 59 in February from January’s 57.3 - the highest reading since June 2000.

The index remains above the crucial 50 level, which indicates expansion.

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