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Eurozone Growth Revised Down

Eurozone Growth Revised Down Eurozone Growth Revised Down

The official second estimate of eurozone growth has been revised down slightly from 0.6% to 0.5% in the first quarter of the year.

The data, from the Eurostat agency, also revised the annual GDP estimate down a touch to 1.5% from 1.6%, BBC reported.

However, the agency said that the vast majority of the 19-country bloc that uses the euro saw higher growth. Only Latvia and Greece saw growth fall. Germany, the biggest economy, more than doubled its growth rate.

It grew by 0.7% between January and March, compared with 0.3% in the final quarter of 2015. Annual growth was estimated at 1.3% compared with a year ago.

Meanwhile, French GDP rose by 0.5% and in Italy, the third largest economy, growth was 0.3%. Spain expanded by 0.8%.

Greece’s and Latvia’s economies contracted by 0.4% and 0.1% respectively.

Outside the eurozone, Hungary and Poland also shrank in the first quarter.

Hungarian Loses

The Hungarian economy suffered its worst contraction in four years in the first quarter, driven in part by a 33.9% plunge in construction output in March.

Quarter-on-quarter Hungarian GDP contracted 0.8%, well below economist forecasts of 0.4% growth and a stark deterioration from the 0.6% expansion seen in the previous quarter. That’s its worst showing since the first quarter of 2012.

Year-on-year, the economy expanded 0.9%, down from 3.2% in the previous quarter, and once again well short of economists’ forecasts of a 2.4% expansion.

This decline was driven in part by a substantial 33.9% drop in construction output in March. Civil engineering works were hit the hardest, dropping 52.4%.

Romanian economy grew by 4.3% in the first quarter of this year against the same period of last year, according to a flash estimate by the National Institute of Statistics.

According to the INS, the GDP moved up by 1.6% against Q4 2015.

  Warning

The eurozone has been struggling to establish firm growth for years. The president of the European Central Bank chief Mario Draghi warned recently that risks to economic growth remained “tilted to the downside”. He called on European governments to act “more decisively” to boost growth.

It has been trying for years to spur on economic activity by its policy of low or negative interest rates, and a bond-buying program which sees it buying €80 billion ($90.78 billion) in assets every month.

Its main interest rate is now non-existent—having been cut from 0.05% to 0%. Its bank deposit rate is minus 0.4%.

The negative rate means that banks must pay the ECB to park cash—move intended to encourage more lending to businesses.

Financialtribune.com