According to a quarterly Commission report published on 2 October 2006, economic growth in the eurozone climbed to an annualised rate of 3.4% in the first half of 2006 - the fastest pace in the past six years.
Despite high oil prices and a slight slowdown in the global environment, the euro economy has expanded rapidly, driven mainly by the rebound in domestic demand, underpinned by a strong pickup in investment, high levels of consumer confidence and robust job creation.
Indeed, labour-market performance over the past five years has been remarkable, with more than five million jobs created. Employment grew at an annual rate of 1.5% in the first half of 2006 - the strongest increase since 2000 - helping to keep the unemployment rate on a downward trend. In July 2006, unemployment stood at 7.8% of the labour force - a full percentage point below the peak level registered in 2004.
However, the report also points out that more can be done, with structural unemployment remaining persistently high and employment rates still well below the Lisbon targets.
Regarding 2007, the report indicates that growth may lose some momentum as interest-rate hikes, tax increases in Germany, a slowdown in the US economy and a deceleration in world-trade start to weigh on activity. However, the report adds: “The broad basis of growth and the fact that it is firmly underpinned by accelerating domestic demand should increase the resilience of the economy to these adverse developments.”
