Eurozone economy grows by 0.2% in first quarter amid Greek debt crisis

08:45, May 13, 2010      

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The Eurozone economy grew by 0.2 percent in the first quarter of 2010, compared with the previous three months, the European Union (EU)'s statistics bureau Eurostat estimated on Wednesday.

The growth was modest as the Greek debt crisis has been intensifying and spreading in the single currency club, which aroused concern over the economic outlook of the 16 EU nations that share the euro.

Meanwhile, the 27-nation EU also saw a quarterly growth of 0.2 percent, according to the flash estimates.

In the fourth quarter of 2009, the eurozone economic growth stood still and the EU only recorded a growth rate of 0.1 percent.

Compared with the same quarter of the previous year, the eurozone economy increased by 0.5 percent in the first quarter of 2010, while the EU rose by 0.3 percent, after a contraction of 2.2 percent and 2.3 percent respectively in the previous quarter.

The debt-stricken Greece remained deep in a recession in the first quarter, whose economy contracted by 0.8 percent on quarterly basis. Analysts had warned that a worsening macroeconomic picture may undermine Athens' ability to cut its budgetary deficits on schedule.

In a desperate bid to prevent the spreading of the Greek debt crisis to other eurozone countries, EU finance ministers agreed early Monday on a 750-billion-euro (953-billion-dollar) rescue mechanism, together with the International Monetary Fund (IMF).

On the positive side, Germany, the largest economy in the euro zone, registered a quarterly economic growth of 0.2 percent in the three months of this year.

The IMF warned in a report on Wednesday that efforts by EU countries to cut budgetary deficits may hamper economic recovery in the region.

The European Commission forecast earlier this month that the eurozone and the EU economy would grow by 0.9 percent and 1.0 percent respectively for the whole year of 2010.

Compared with the United States, economic recovery in Europe was much more fragile. During the first quarter of 2010, the U.S. economy increased by 0.8 percent compared with the previous quarter, after 1.4 percent in the fourth quarter of 2009. It rose by 2.5 percent compared with the same quarter of the previous year.



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