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Exports Lift Eurozone Q2 GDP Growth â€Ž

06 October 2010 15:25 (UTC +04:00)

Baku â€“ APA-Economics. The Eurozone economy recorded its fastest expansion in four years as estimated in the second quarter as stagnation in household spending growth was counteracted by acceleration in exports and investment, RTT News reported.

Contribution from foreign demand will ease in the months ahead with global growth heading to a slowdown.

The 16-nation currency bloc grew 1% in the second quarter on a sequential basis, according to latest estimates from the European Union statistical office Eurostat, released on Wednesday. It follows a 0.3% rise in the first quarter.

Annually, economic growth was 1.9%, much faster than the 0.8% growth recorded in the previous quarter. The second quarter growth figures matched the estimate published on September 2.

The European Commission upwardly revised the 2010 growth forecast for the region to 1.7% in its interim forecast as the first half economic growth was better than expected. GDP is projected to expand by 0.5% in the third quarter and 0.3% in the fourth quarter.

Eurozone GDP growth is seen at 1.6% in 2010, then it will moderate to 1.3% in 2011, said IHS Global Insight economist Howard Archer.

In the EA16, household consumption growth stagnated at 0.2% quarter-on-quarter. The second quarter figure was revised down from 0.5%. At the same time, government spending grew by an unrevised 0.5%, following a 0.2% rise in the first quarter.

Stabilizing labor markets provided some support to consumer spending, but unemployment was nevertheless still high while ongoing muted wage growth, higher inflation, the withdrawal of some fiscal stimulus measures and concerns about the longer-term economic outlook and personal finances likely limited the upside for spending, commented IHS Global Insight’s Archer.

Investment recorded an increase of 1.5% instead of 1.8%. However, this growth reversed a 0.3% fall in the prior quarter. Exports and imports rose 4.3% and 4%, respectively. The previous estimate had shown a 4.4% growth in exports and imports.

Changes in inventories added 0.3 percentage point to GDP compared to last quarter’s 0.8%. Contribution was only 0.2 percentage point according to first estimate.

The EU27 bloc also expanded 1% on a quarterly basis lifting the annual growth to 2%. In the second quarter, Lithuania recorded the largest growth rate compared with the previous quarter, followed by Germany.