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Eurozone recovery gains ground19th of May 2011
The European Commission has raised its eurozone growth forecast and announced that the economic recovery is gaining ground. But it was also quick to warn of higher inflation as a result of surging oil prices.
EU economic and monetary affairs commissioner Olli Rehn said he expected gross domestic product in the 17-countries eurozone to increase by 1.6 per cent in 2011, 0.1 per cent above the rate predicted in November.
"While exports should continue supporting the recovery, a rebalancing of growth towards domestic demand is expected for 2011, resulting in more sustainable growth," said Rehn, adding that the recovery remains unevenly spread across EU member states.
Inflation to go up
The German economy is expected to expand by 2.4 per cent against a previous estimate of 2.2 per cent. France will see growth of 1.7 per cent instead of 1.6 per cent, while Britain will record two per cent growth, slightly lower than previously estimated, according to the newly released data.
At the other end of the spectrum, debt-laden Mediterranean countries will see only meagre growth: 1.1 per cent in Italy and 0.8 per cent in Spain.
The EU executive has also revised upwards its inflation estimate for the euro zone from 1.8 per cent to 2.2 per cent, above the European Central Bank's two per cent threshold for price stability.