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7/17/06

IHT: France and Germany set to underpin euro zone

For the complete report go to International Herald Tribune or click on this link

France and Germany set to underpin euro zone

The European Commission forecasts 2.1 percent growth in the euro zone in 2006 after 1.3 percent growth in 2005 but says it may raise the 2006 forecast in September. It said last week that there might be a dip in the third quarter before a new spurt in the fourth. It said it forecast growth of 0.4 percent to 0.8 percent in the second quarter, 0.3 percent to 0.7 percent in the third and 0.5 percent to 1 percent in the fourth quarter. The German central bank said that aside from growth in the manufacturing sector, the resurgent construction industry had contributed strongly in the second quarter after poor weather hit output in the first three months of 2006. "As both construction spending and outlays on plant and machinery likely rose, investment was thus the key driver of economic growth in the spring," the German central bank said in its report.

The French economy should grow 0.6 percent in the second quarter, the Bank of France said, trimming from a prediction of 0.7 percent growth quarter-on-quarter in a previous survey. French gross domestic product rose 0.5 percent quarter-on-quarter in the first three months of the year, according to official figures.

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