Brussels, 04/10/2007 (Agence Europe) - The slowdown of the second quarter of the year 2007 was perhaps the sign of a turning point in the eurozone business cycle (0.3% growth in the eurozone compared to 0.7% during the first quarter). While growth remained sustained in the second half of 2007, the downside risks for the economy seem to be on the rise, the European Commission notes in its quarterly report on the eurozone published on Thursday 4 October. Nonetheless, as it had already noted in its intermediary forecasts (EUROPE 9499), the Commission considers that economic fundamentals continue to look healthy, with strong balance sheets and improved economic resilience.
With a more resistant eurozone economy (interim forecast projects growth at GDP 2.5% for the year as a whole), this could contribute to weathering the financial crisis. Nevertheless, with the possibility of a sharper slowdown in the USA, the report states there is still a danger which is difficult to assess. Risk re-assessment and the expected tightening of financing conditions have been detrimental to investor confidence, although the overall impact of the financial crisis on eurozone growth should remain limited in 2007. The report is available at the following address: http: //europa.eu.int/comm/economy_finance/publications/quarterly_report-on-the-euro-area-en.htm. (ab)