BRUSSELS, July 10 - The euro zone economy grew by 0.1 percent in the first three months of this year, rather than stagnating as previously reported, data showed on Thursday. But the European Commission said there were risks that it could perform more poorly in the two subsequent quarters. The unexpected revision to the quarterly gross domestic product data came as more national data became available and as Italy began to submit seasonally-adjusted data, the EU statistics agency Eurostat said.
But it left the euro zone's year-on-year growth rate unrevised at 0.8 percent. A Eurostat official said the upward quarterly revision looked more dramatic than was actually the case because of rounding effects. Separately, the Commission said a model that forecasts euro zone GDP predicted quarterly change of between 0.0 and 0.4 percent in the second and third quarters. "Most indicators used in the model for this horizon (the second quarter) continue to suggest slow growth, although some recent confidence indicators have shown a slight improvement," the Commission said in a statement.
The figures from Eurostat and the Commission chime in with recent predictions by the EU executive that economic recovery would only materialise slowly during the course of this year. The Commission has said the euro zone economy would not stagnate this year but at the same time admitted growth could undershoot a one percent forecast it made only three months ago. EU Monetary Affairs Commissioner Pedro Solbes said last week the euro zone economy could expand 0.7 percent this year. The reports are therefore likely to buttress financial markets' view that the European Central Bank will cut interest rates later this year, even though it is expected to leave them unchanged at its policy meeting on Thursday.//