Business investments give boost to Euro Zone Economy

The euro zone’s economic growth in the first quarter was fueled by a sharp rise in business investment, official data showed Wednesday.

Official statistics agency Eurostat’s second estimate of gross domestic product showed the 17-nation economy grew 0.8% in the first quarter from the last three months of 2010, and 2.5% year-to-year. That was the fastest annual growth in three and a half years. The figures were unchanged from Eurostat’s previous "flash" estimate.

Eurostat said businesses ramped up their investment at a rate not seen since the April-to-June period of 2010, rising 2.1% on the quarter and accounting for half of the economy’s overall 0.8% growth rate. Investment slumped in the second half of last year as fears engulfed the euro zone around the creditworthiness of its financially weaker member states.

Evidence that growth is being fueled by a resurgence in businesses’ appetite to spend, rather than by exports or government spending, could increase pressure on the European Central Bank to raise its key interest rate in the months to come. The ECB will announce its latest rate decision Thursday but few economists expect it to tighten monetary policy just yet.

Hitesh Anand

I am a post graduate from Newcastle University, UK. I like studying and analyzing economic data and financial health of world.

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