European Economy. Quarterly report on the euro area 2007.

Abstract

Good times are here for the euro area. The economic expansion is solid with GDP growing at an annual rate of 3% in the first quarter of this year and business and consumer confidence running high. Inflation has been stable at around 1.9% since November last year. It also looks like good times are there to stay for some time. The Commission's spring 2007 forecast estimates that the euro-area's economy will grow by 2.6% in 2007. This is an upward revision of ½ percentage point with respect to the autumn forecast. The inflation outlook also remains benign in the light of moderate wage growth, a revival in productivity growth and low imported inflation thanks to the euro's appreciation. Nevertheless, upward risks to prices may materialise as the cycle matures.