This is the strongest growth since 2000 and a huge improvement on figures for 2005, when growth levels remained at 1.6% for the EU and 1.4% in the eurozone.
These new estimates, contained in the Commission’s second interim economic forecast, published on 6 September 2006, take in the fact that growth in the 25 member states accelerated to 0.9% in the second quarter of 2006, compared to only 0.7% in the US and 0.3% in Japan.
The OECD, which published its global economic forecast one day earlier, is even more optimistic about eurozone growth, saying it is likely to reach 2.7% this year.
Both reports predict that the upturn will lose momentum towards the end of the year, with economic growth due to level off at around 2%. This concurs with many economists' predictions, which forecast a marked slowdown in the eurozone. This is linked to the fact that both Germany and Italy – which together account for half of the euro region's economy – have decided to raise taxes in view of reducing their budget deficits, which have been over the limit of 3% of GDP set by the EU since 2003.
Nevertheless, the OECD remains optimistic about the outlook for Europe in 2007, saying that the effect of the tax hike would be “bearable”. The Paris-based organisation also believes that the European economy would be strong enough to face another raise in interest rates by the ECB, which is expected to come in October (see EurActiv 1 September 2006).
