Euro zone Q1 GDP growth revised down to 0.7 pct
Güncelleme Tarihi:
The euro zone economy rebounded less strongly than previously thought in the first quarter of 2008, data showed on Wednesday, adding to worries about the health of the currency area.
Gross domestic product in the 15 countries using the euro rose 0.7 percent quarter-on-quarter, European Union statistics office Eurostat said, revising downwards its previous estimate of 0.8 percent.
It said euro zone GDP rose 2.1 percent in annual terms, compared with 2.2 percent estimated in June.
"Although euro zone GDP growth in the first quarter was revised down marginally, it was still ... impressive-looking," said Howard Archer, chief economist at Global Insight. "However, it is clear that this performance was inflated by a number of factors and overstated the strength of the economy," he said.
Still, the unexpected revision was another sign the euro zone's economy is being hit by a credit crunch and the
The economy will feel the full impact of those factors in the second quarter, analysts said. "We expect a fall in GDP by 0.2 percent, quarter-quarter, the first fall on a quarter-quarter basis since the first quarter of 1996," said Juergen Michels, economist at Citigroup.
"That is because of financial market turbulence but also reflects that the strong euro has some impact on activity in the euro area, plus the impact from higher energy costs on domestic demand," he added.
Economists polled by Reuters had expected Eurostat to confirm its previous estimate for the first quarter.
DOWNSIDE RISKS
On a positive note, the statistical office revised up by 0.1 percentage point its growth figures for the fourth quarter of 2007 to 0.4 percent quarter-on-quarter and 2.2 percent year-on-year.
Just before the figures were published, top euro zone policymakers expressed concern about growth prospects and inflation, which has been boosted by soaring prices of energy and food.
"Uncertainties surrounding the outlook for growth remain, with downside risks mainly related to further unanticipated increases in oil prices ... and increasing protectionist tendencies," European Central Bank President Jean-Claude Trichet told the European Parliament.
Similar worries were voiced by Jean-Claude Juncker, the chairman of the Eurogroup of finance ministers. He said inflation was citizens' main concern, so the ECB was right to fight price growth with determination.
The ECB increased its main interest rate last week to 4.25 percent from 4 percent, despite concerns that doing so would undermine already slowing growth, after inflation hit a record 4 percent in June -- double the bank's target.
The revision of first-quarter growth resulted from an upward revision of the imports figure to a 2 percent increase from a previous reading of 1.8 percent.
This meant that with export growth unchanged at 1.9 percent, the net trade of the euro zone shaved off 0.1 percentage point from GDP, instead of boosting it by the same figure.
Other components of GDP growth remained unchanged, compared with the previous estimate in June.