BRUSSELS, Nov 14 - The euro zone economy grew at its fastest rate in a year in the third quarter and should pick up even more steam in the next six months, according to data on Friday that confirmed economic recovery is underway. The gross domestic product (GDP) of the 12-member bloc rose by 0.4 percent in the third quarter from the previous quarter, reversing the 0.1 percent contraction seen in the previous three months, Eurostat said. It climbed 0.3 percent from a year ago. It was the biggest quarterly increase since the second quarter of 2002 and even beat consensus forecasts which had been raised to 0.3 percent following encouraging figures from Germany and France on Thursday but before strong Italian data on Friday. Even stronger growth lies ahead, according to a European Commission model which forecast quarterly euro zone growth. It expects the bloc's economy to expand by between 0.2 and 0.6 percent in the fourth quarter of 2003 and by between 0.3 and 0.7 percent in the first quarter of 2004. "There is a clear sign that all the important countries are recovering and this is the trend now," a Eurostat official said. While Eurostat is waiting for more national data to confirm its flash estimate of growth, it does not expect the next major release -- Spanish GDP data -- to lead to much revision. "We have indications from Spain and data that will come out from there should not affect the estimate," the official said.
GOOD NEWS ALL ROUND
The euro zone data followed hard on the heels of national figures from Italy which showed the euro zone's third biggest economy emerged from recession to post its best quarterly growth rate since the first quarter of 2001. The Italian statistics office data showed the Italian economy grew 0.5 percent in the third quarter, both on a quarterly and year-on-year basis. That was also stronger than economists' forecasts. "The (Italian) data is really strong, beyond expectations. After the GDP rises seen yesterday in France and Germany, we can say the European economy has recovered in the third quarter, benefiting from global growth," Luigi Speranza, analyst at BNP Paribas.
Reports on Thursday had showed the German economy pulled out of its second recession in two years in the third quarter by expanding by 0.2 percent in the July to September period. The French economy narrowly avoided the first-half recession that ensnared Germany and Italy, and expanded by 0.4 percent during the same period. The European Central Bank said on Thursday there were growing signs of euro zone recovery, and the latest reports chime with Commission predictions that recovery will take hold in the second half of 2003 and pick up momentum next year. The model-based GDP forecast "is in line with the acceleration of growth projected in the Commission autumn forecasts," the European Union executive said.//