MercoPress. South Atlantic News Agency

Euro zone growth outpaced the US; first time since 2001

An initial estimate shows that Euro zone economic growth dipped last year to 2.7%, but still easily outpaced the US economy for the first time since 2001. The rate marked only a marginal slowdown from 2006 when the Euro zone economy grew by 2.8%. The US economy slowed to 2.2% in 2007.

Although the Euro zone economy kept up a solid pace last year, a housing downturn in the US and the turmoil it triggered in financial markets began taking its toll at the end of 2007 on top of record oil prices and a soaring Euro. The Eurostat data agency said Euro zone economic growth slowed to 0.4% (2.3% annually) in the final three months of 2007, sharply lower than the 0.8% (2.7%) in the third quarter. However the 2.7% is a pleasant surprise since the European Commission, the European Central Bank, the International Monetary Fund and the Organization for Economic Cooperation and Development were forecasting 1.6%. Spain which expanded 0.8% in the last quarter of 2007, following 0.7% in the third quarter was the only of the large EU economies not to suffer a downturn: Germany went from 0.7 to 0.3% and France from 0.8 to 0.3%. No data on Italy was provided. Meantime in Brussels Euro group president Jean-Claude Juncker said the European Central Bank's (ECB) priority is fighting inflation, but it is "not blinded" over the Euro zone's economic outlook. "The first objective of the ECB is to guarantee price stability; that's what the ECB is committed to via the treaty" Juncker told reporters ahead of a meeting of Euro zone finance ministers. "But I am solemnly convinced that the ECB is not blinded on the economic perspective". Juncker said Euro zone growth this year "will be slightly below potential", in the range of 1.6 to 1.8% but emphasised the bloc is "not in bad times". If Juncker's forecast is confirmed, it approximates the International Monetary Fund's forecast of 1.6% in 2008. The European Commission is scheduled to publish growth forecasts for the Euro zone next week. In its most recent estimates from November the EC forecast 2.1% growth in 2008.