Newspaper article International New York Times

G.D.P. Data Show Europe Slowly Rising from Depths ; While E.C.B. Stimulus Seems to Help, Lack of Jobs Remains a Hurdle

Newspaper article International New York Times

G.D.P. Data Show Europe Slowly Rising from Depths ; While E.C.B. Stimulus Seems to Help, Lack of Jobs Remains a Hurdle

Article excerpt

The European Commission said its prediction for eurozone growth this year was now 1.5 percent, up from 1.3 percent

It may not be reaching escape velocity yet, but the European economy is definitely picking up steam, an official forecast showed on Tuesday, as lower oil prices, favorable foreign-exchange rates and a central bank stimulus added momentum to a modest recovery.

The European Commission said it was revising upward its forecast for eurozone economic growth this year to 1.5 percent, from 1.3 percent, accelerating from the 0.9 percent growth posted last year. For 2016, the commission predicted that the eurozone economy, composed of the 19 nations that share the euro, would grow 1.9 percent.

"Eurozone G.D.P. is likely to beat both the U.S. and the U.K. in the first quarter, the first time since 2011," Christian Schulz, an economist with Berenberg Bank in London, said before the commission's new forecasts were announced. "It shows that Europe is becoming normal again."

He predicted that the eurozone would show first-quarter expansion of 1.6 percent. The economy of the United States expanded at a meager annualized rate of 0.2 percent in the first three months of the year, while Britain's grew 1.2 percent. But for the full year, Mr. Schulz said, it was probable that the American economy would still grow faster.

Valdis Dombrovskis, the European Commission's vice president for the euro and social dialogue, said in a statement announcing the revised spring forecasts that European nations needed to carry out additional structural changes, spur investment and encourage "fiscal responsibility."

The commission said domestic demand was driving growth in gross domestic product, while investment was expected to rebound in 2016. The fall in energy prices that began in June, which appears to have ended, has had the effect of a stimulus for households, enabling them to spend more of their income on other goods and services.

The European Central Bank's recent policy of large-scale bond buying, known as quantitative easing, has helped by driving down interest rates, and the weaker euro has benefited exporters.

"The eurozone is a large, diversified economy that had been held back by the euro crisis and the E. …

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