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EU: Eurozone economy records best performance since 2000

The Eurozone economy, boosted by strong domestic demand and vibrant export growth, last year recorded the best performance since 2000, the European Commission said on Thursday.

According to a quarterly report released by the Commission Thursday, the gross domestic product (GDP) of the bloc sharing the same currency euro grew by 0.9 percent in the fourth quarter of 2006, during which household consumption remained firm, while construction investment might have benefited from favorable weather conditions.

For the year as a whole, GDP rose by 2.6 percent, the highest rate since the turn of this century, making 2006 a very good vintage for the euro zone. The growth rate was 1.4 percent in the previous year.

Economic expansion helped to the improvement on the labor market. Employment in the euro zone increased by 0.3 percent in the fourth quarter and by 1.4 percent in 2006 as a whole, the highest annual rate since 2001. Meanwhile, unemployment kept falling, standing at 7.4 percent in January 2007, its lowest level since 1993.

The European Union's executive arm estimated that growth will slow temporarily in the first quarter of this year, citing the impact of the value-added tax rise in Germany, the largest economy in the euro zone.

But prospects remained favorable, the Commission said.

Based on the fact that business confidence and consumer confidence stand at high levels, the Commission said in its recent interim forecasts that the economy should continue to grow in 2007 at a robust rate of 2.4 percent.

Climbing wage had been cited as one of the major risks for the economic development in the euro zone. However, the Commission's report found that brightening economic conditions had not translated into accelerating wage growth, and risks appeared very balanced in the near future.

The eurozone economic growth are becoming more stable, due to structural changes in the economy and better macroeconomic policies, the Commission said.