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Eurozone growth confirmed at modest 0.3 per cent

03 March 2011, 12:29 CET
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(BRUSSELS) - The eurozone economy grew a modest 0.3 percent in the fourth quarter of 2010, official data confirmed Thursday, amid fears Portugal may lack the strength to overcome an unrelenting debt crisis.

As European governments count down towards a self-imposed March 25 deadline for resolving the bloc's sovereign debt crisis, Eurostat agency figures showed the 17-nation eurozone behind the United States but moving ahead of Japan in the last quarter of the year.

The United States posted 0.7 percent growth between September and December 2010 but Japan saw gross domestic product fall by 0.3 percent.

Economists blamed the low growth rate on winter storms curbing activity and weak German and French growth but said overall performances were varied.

"We expect eurozone GDP growth to come in around 1.6 percent in 2011," London-based IHS Global Insight analyst Howard Archer said.

"There is likely to be an ongoing marked divergence in growth performances between the core northern eurozone economies (very much led by Germany) and the southern periphery economies and Ireland.

"Of course, any sustained or increased spike up in oil prices will exact an increasing toll on eurozone growth through squeezing consumers' purchasing power and companies' margins," he said.

Eurozone exports rose 1.8 percent, with imports up 1.1 percent for the quarter.

Across the full 27-nation European Union, home to half a billion people and some 20 million companies, growth came in at 0.2 percent compared to the previous three months.

Over the whole year 2010, GDP increased 1.7 percent in the eurozone and by 1.8 percent in the EU.

Eurozone leaders will hold a summit on March 11 before another meeting of heads of state and government from the EU on March 24-25 to agree on a permanent crisis fund and ways to coordinate economic policies.

The EU bailed out Greece last year and set up a temporary crisis fund that was tapped by Ireland at the end of 2010.

Analysts have warned that Portugal could need rescue within weeks, after its bond yields rose to the same trigger levels as Greece in the run-up to its bailout in May.

The Eurostat figures put a spotlight on the two-speed recovery in the eurozone, which expanded to 17 members in January when Estonia adopted the euro.

While Germany and France recorded growth of 0.4 percent and 0.3 percent in the fourth quarter, Spain gained 0.2 percent, Portugal shrank 0.3 percent and Greece was stuck in recession at negative 1.4 percent.

Euro area GDP up by 0.3% and EU27 GDP up by 0.2% [Eurostat]


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