Brussels, 05/10/2004 (Agence Europe) - Economic recovery in the Euro-zone is bouncing back in a world context where oil price hikes and economic slowdown constituted risks for the next quarterlies. The third report for the third quarterly in 2004, published on Tuesday by the Direction General of Economic and Monetary Affairs at the European Commission, indicated that in the second quarter of 2004 growth in the Euro zone 0.5% of GDP, was slightly less than the 0.6% registered in the first quarterly. Growth is expected to continue in the second half of the year but the rhythm will not speed up. Director General Klaus Regling, also recognised on Tuesday to the press that sluggish demand was the most worrying element as the international environment was weaker.
At an international level, growth has suffered a clear fall in the first and second quarters from 1.7% of GDP to 0.9%, which can be attributed to hikes in interest rates and oil price rises per barrel. In the Euro-zone, exports will continue to help growth in coming months, but taking into account certain indicators, they could get weaker. These indicators are not yet reflected in the world economy, admitted Mr Regling, who underlined that growth in Europe until now had been dependent on external demand and that the passage to sustained growth through domestic demand had not as yet materialised. The effect of internal demand on growth in GDP even declined in the second half of the year compared with the six months before. It has been seriously limited by a lack of confidence in homes and a tentative recovery in the jobs market. It is also not equal geographically. France, Spain and to a lesser extent, Belgium, have had sustained internal demand since the beginning of the year but in Germany and the Netherlands the figures leave a lot to be desired. Throughout the Euro-zone, demand is expected to get better, Mr Regling stated but did not want to make any forecasts for growth in 2005 (these will be published on 26 October by the Commission.
In terms of jobs, the report notes that recent developments do not suggest any significant recovery has occurred since the beginning of the year and that increases in the job market would remain modest in the next three quarterlies. Klaus Regling points to the fact that over a five year period, however, performances in the Euro-zone have been good compared to the USA, given that the most recent figures for 2000-04 forecasts see an increase of 4.6% in the Euro-zone compared to 3.4% in the USA. (the text of the report is available on http: //europa.eu.int/comm/economy_finance/index_en.htm).