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Eurozone Economy Shows Encouraging Growth - 2003-11-14

There are signs of movement in the European economy, which has been mired in a slowdown. The latest figures show some encouraging growth.

The 12 nations that use the common euro currency grew at their fastest rate in a year during the third quarter, according to figures released by the European Union's statistics agency, Eurostat.

The economy grew four-tenths of a percent in the quarter, reversing the slightly negative growth rate seen in the previous quarter. This is the largest such increase since the second quarter of 2002, and follows encouraging economic figures issued this week from the euro zone's three largest economies: Germany, France and Italy.

But while the news is welcome, it is far from a real recovery, according to Daniel Gros, director of the Center for European Policy Studies.

"There is at least a ray of hope, in the sense that the European economy is no longer moving downhill," he said. "But the movement uphill is also rather slow. It's really a snail's pace. It's not a strong recovery."

Mr. Gros says exports are a big part of the euro zone economy, and helped to give it a boost, in spite of near record highs for the euro, which has recently traded around 1.17 to the dollar.

"Exports have actually played a surprisingly strong and important role," he said. "Most people thought that, because of a stronger euro, exports would become weaker. But we have seen that actually the opposite has happened. And this probably is due to the fact that demand has expanded so rapidly in the United States and in Asia, especially in China."

The European Central Bank this week said there are growing signs of a euro zone recovery, and the EU's executive commission has forecast that recovery will begin in the second half of this year and continue in 2004.