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Eurozone recovery picks up speed | |
(35 minutes later) | |
The eurozone's economy grew by a faster-than-expected 0.6% in the first three months of the year, according to official statistics. | The eurozone's economy grew by a faster-than-expected 0.6% in the first three months of the year, according to official statistics. |
The growth rate in the 19-nation bloc doubled from the 0.3% rate recorded in the previous quarter, and was above analysts' expectations of 0.4%. | The growth rate in the 19-nation bloc doubled from the 0.3% rate recorded in the previous quarter, and was above analysts' expectations of 0.4%. |
However, separate data from Eurostat also indicated that deflation had returned to the eurozone. | |
Inflation in the bloc fell to minus 0.2% in April, down from zero in March. | |
Other Eurostat figures showed the eurozone's unemployment rate fell to 10.2% in March, the lowest rate for four-and-a-half years. | |
Uncertainties remain | |
The latest growth figures suggest that the eurozone's economy is now bigger than it was before the start of the financial crisis eight years ago. | |
Howard Archer, economist at IHS Global Insight, said the eurozone should be able to sustain a growth rate of about 0.4% quarter-on-quarter in the future, but warned the rate could ease in the three months to June. | |
"Global economic uncertainties and problems are still a handicap for eurozone growth, not only through limiting exports but also through weighing down on business and consumer confidence," he said. | |
"The risk of recurrent terrorist attacks and the possibility of the UK voting to leave the EU in June's referendum are also uncertainties that could impact on eurozone growth." | |
ECB action | |
The inflation figures showed that energy prices fell 8.6% year-on-year in April, while unprocessed food prices rose 1.2%. | |
Stripping out those items, the core inflation rate showed consumer prices rose 0.8% year-on-year in April - less than a 1% increase in March. | |
The European Central Bank's target is to keep the headline inflation close to, but below, 2%. | |
In March, the ECB cut interest rates further and expanded its bond-buying stimulus programme in an attempt to drive growth in the eurozone and push up inflation. | |
Analysis: Andrew Walker, BBC economics correspondent | |
Deflation returns. Falling energy prices are keeping inflation very low for sure, but that was not what made the headline figure slip below zero once again. | |
Energy price falls actually slowed slightly. The key factor was a dip in services inflation to just 1%. Compare that with the European Central Bank's inflation target of below but close to 2%. | |
The gap between the data and the target is too wide for the ECB's liking. The view there is that there are economic costs when prices rise too slowly. | |
With luck the drop into negative territory might be a consequence of the early Easter, as some economists are saying. And at some stage the impact of oil price falls will stop dragging overall inflation down. | |
Still, the figures are a telling reminder of how the ECB is struggling to achieve its objective. |