The euro zone economy grew 0.5% in the first three months of this year from the final quarter of 2004 amid wide divergences between individual countries, a second estimate released today by the EU's Eurostat statistics arm showed.
The rate, which was unchanged from a first estimate, marked an improvement from the 0.2% growth posted by the 12-state euro zone in the fourth quarter of 2004.
The Eurostat growth figures showed that across the full 25-state EU, growth was also 0.5% in the first quarter following 0.3% in the last quarter of 2004. On a 12-month basis, the euro zone economy grew 1.4% in the first quarter and that of the entire EU 1.6%.
Separately, the European Union's executive commission forecast that the euro zone was on track for growth in a range of 0.1-0.5% in the second quarter and 0.2-0.6% in the third quarter.
EU economic affairs commissioner Joaquin Almunia said earlier this week that euro zone growth was likely to pick up over the course of the year after a weak second quarter.
A breakdown of the data confirmed a recent trend of diverging growth rates among euro zone economies. Germany, the euro zone's biggest economy, saw firm quarterly growth of 1% at the beginning of the year, which however was due primarily to a pick-up in exports while domestic demand remained weak. German exports grew 2.9% in the first quarter while domestic demand slipped 0.6%.
But Greece was the euro zone country showing the strongest growth, with a quarterly increase of 2.4% and Spain saw solid growth of 0.9% growth.
The firm growth in those three countries contrasted with the declining fortunes of Italy, the Netherlands and Belgium.
Italy, the euro zone's third-biggest economy, shrank 0.5% in the first quarter after already contracting 0.4% in the final quarter of 0.4%, meaning the country slipped into recession at the beginning of the year. The data showed that domestic demand had stalled in the first quarter while, exports, traditionally the motor of the Italian economy, had slumped 4.1%.
The Belgium economy saw no growth in the first quarter while the Dutch economy shrank 0.8%.
France, the second-biggest economy in the euro zone, was in between the laggards and the sprightly with growth of 0.3% thanks to firm domestic demand and despite a dip in exports.
In a study released by the EU commission earlier this week, it downplayed the divergences between euro zone growth rates as 'natural and inevitable' but at the same time called on governments to make the reforms to tackle the root causes of varying fortunes in the the area.
Outside the euro zone, the EU's new eastern European members chalked up some the strongest growth rates. Latvia led the pack with 2% growth in the first quarter followed by Estonia with 1.8% growth. Poland, the regional heavyweight, saw firm growth of 1.4%.
