Growth expectations raised for Eurzone, EU economies
According to new forecasts from the European Commission, the Eurozone economy will grow by 2.4 percent in 2007, up from an earlier forecast of growth of 2.1 percent this year. In addition, the Commission has said that it expects inflation to be at 1.8 percent in 2007, rather than the 2.1 percent inflation predicted earlier.
The improved numbers are justified, according to EU monetary affairs commissioner Joaquin Almunia, due to a broad recovery across the Eurozone, with growth over the full European Union expected to be even higher than in the 13 nations that use the Euro as their currency. Poland is expected to see the years best growth, at 5 percent. Spain is close behind, with growth expected to be at 3.7 percent. Italy’s economy is expected to grow at a rate of 2 percent, while the UK is expected to see growth of 2.7 percent. The German economy is expected to grow by 1.8 percent. The predictions for all these nations have been upgraded.
The only national economies that received lowered forecasts for growth were France, now expected to see its economy grow by 2.2 percent, and the Netherlands, which is forecast to see its economy grow by 2.8 percent.
The lowered inflation forecast was explained by increased productivity and competition and to a stronger euro. The Commission said, however, that if wages rise faster than productivity the European Central Bank might be forced to issue further interest rate increases.
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