Brussels, 19/12/2007 (Agence Europe) - According to the Quarterly Report on the Euro Area (QREA) published on Tuesday 18 December, GDP growth in the Euro area rebounded to 0.7% in the third quarter of 2007. In its autumn forecasts in 2007, the Commission was counting on a rise in GDP of 2.6% this year and 2.2% in 2008 (EUROPE 9540). In the third quarter of the year, economic activity was mainly underpinned by domestic demand and a rebound in investment, explains the document, which does, however, also expect a slowdown in the next quarter mainly due to the international financial market conditions since the sub-prime crisis. Despite inflation rising sharply to 3.1% in November, inflation has never been so low and stable than since the advent of the Euro, as the report highlights. The report says that this record appears to be due to an improved monetary policy and a better understanding of the importance of inflation expectations.
Looking at labour market reforms, the report shows that they were particularly important in the early years of this decade, especially in those countries that need them most, such as Greece, Italy and Spain. On a more encouraging note, it highlights that in the network industry, the Euro area has outperformed the US in productivity. The analysis of the causes of the productivity slowdown shows a need to re-focus on a more intensive use of R&D and high-skilled human capital. The report is available at: (http: //europa.eu.int/comm/economy_finance/publications/quarterly_report_on_the_euro_area_en.htm). (A.B.)