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Euro zone records strong GDP growth in Q2

(Agencies)
Updated: 2010-08-13 18:54
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BRUSSELS - Euro zone gross domestic product grew at its fastest pace in more than three years in the second quarter, boosted by a strong performance by Germany and France, but concerns remain that the rebound could falter.

European Union statistics agency Eurostat said GDP in the 16-nation currency zone expanded by 1.0 percent in the second quarter from the first, and by 1.7 percent versus the second quarter of 2009, matching a revised Reuters poll.

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Economists said the figures were the strongest in at least 3-1/2 years and showed euro zone growth outpacing that of the United States in the March-June period.

"There was a common sense among economists that the second-quarter GDP figure would be very good, and it's actually better than expected," said Hans Bevers, an economist at KBC.

"But in the next quarters we expect there to be a sort of easing. There will be growth, but it will be less than we've seen in the second quarter as Europe will normally follow the US, where we've seen also this easing in the last couple of months."

A revised Reuters poll of economists taken on Friday, after strong national figures from Germany and France were released, forecast the growth to come in as it did at 1.0 percent quarter-on-quarter and 1.7 percent year-on-year.

Germany proved the engine of the euro zone growth figures, with data released earlier on Friday showing the German economy expanded by 2.2 percent in the second quarter, the fastest rate since German reunification, with companies stepping up investment and exports surging.

"Germany is able to respond quickly to pick-ups in global demand," said Astrid Schilo, Europe economist at HSBC.

"They have the goods that people want. That is what we are seeing in these numbers. But we have to remember, it can contract just as quickly."

France also recorded strong growth of 0.6 percent quarter-on-quarter. The main drag on the euro zone was Greece, where GDP contracted 1.5 percent in the period.