Economic upswing in the EU loses momentum

The Eurozone´s GDP expressed in real terms increased significantly in the third quarter of 2007 after it had grown only slightly in the second quarter. However, the prospects for future economic development are less bright due to continuing turbulences on financial markets and high inflation resulting from higher crude oil prices. These forecasts were made in the “Eurozone Economic Outlook” (EEO) which is a common project by the ifo-Institute, the INSEE in Paris and the ISAE in Rome.

Furthermore, according to the forecasts, the Eurozone´s GDP will only grow slowly over the quarters to come. It is said to have grown by just 0.5% in the fourth quarter of 2007 and to increase by just 0.4% in both the 1st and 2nd quarters of 2008. Industrial output is forecast to grow only slowly after a sharp increase in the 3rd quarter.

The findings received in the course of company surveys were increasingly negative recently. According to the polling firms involved, private consumption is expected to increase only moderately due to increased prices for foodstuffs and energy. The same applies to investments. On the assumptions that the oil price will fluctuate between 90 and 95 dollars per barrel and the exchange course of the dollar against the Euro will be 1.45, inflation is expected to increase to 3.0% in the first quarter of 2008 before slightly falling to 2.8% in the second quarter. GERMAN