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Strong German Growth Drives Euro Economy
By Aoife White, AP Business Writer
Manufacturing.Net - May 15, 2008

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BRUSSELS, Belgium (AP) -- Germany's strong quarterly growth in the first three months of the year drove the euro economy to grow 0.7 percent from the previous quarter, German and EU statistics showed Thursday.

The 15 nations that use the euro accelerated far faster in the first quarter than the 0.4 percent quarter-on-quarter growth seen in the final three months of the year, the EU statistics agency Eurostat said.

It separately confirmed that euro inflation in April had cooled down to 3.3 percent -- in line with a first estimate -- from a record high of 3.6 percent in March.

The EU's top economy official, Joaquin Almunia, said even this was too high.

''3.3 percent is higher that what we want,'' he told reporters, blaming the surge on higher global prices for food and fuel. ''We hope the external shocks do not increase further.''

The rate is well above the European Central Bank's guideline of just under 2 percent. Concerns over the slowing euro economy and tight borrowing conditions have knocked it off a usual course of hiking rates to cool inflation.

Eurostat said transport fuel, heating oil, dairy products and eggs, and bread and cereals were the main factors driving up inflation.

The euro-zone's quarterly growth outpaces the United States' 0.1 percent growth during the same period, using comparable statistics.

Germany, the largest euro state, grew 1.5 percent in the first quarter of 2008 over the previous quarter on both strong domestic consumption and foreign trade, according to a preliminary report from the Federal Statistics Office.

''The economic recovery seen last year continued at the same pace over the first quarter as a whole,'' the agency said in a statement. ''Despite stronger load factors, the German economy proved to be very robust at the beginning of 2008.''

However, year-on-year growth was less dramatic as the economy slows down from a boom that stretched until mid-2007. The euro-zone grew 2.2 percent compared to the first quarter of 2007, the same pace as the fourth quarter.

In Germany, price-adjusted gross domestic product was up 1.8 percent in the quarter compared with the same quarter a year ago, rising to 2.6 percent when adjusted for the fact that there were two fewer working days in the quarter over the first quarter of 2007.

German growth is still allowing it cut jobless queues which reached record lengths in 2005. The number of people employed grew by 686,000, or 1.8 percent, compared to the first quarter a year ago.

Eurostat's growth figures are a first estimate and can be revised up or down when new statistics for the quarter are published on June 3 and June 9. More detailed German statistics will be released on May 27.


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