Euro zone escapes recession in revised growth estimate

BRUSSELS (AFP) - Growth figures on Wednesday confirmed that the euro zone finally escaped a damaging 18-month recession in the second quarter, but the bloc still lags well behind in global terms.

The economy of the 17-nation euro zone, home to about 340 million people, grew 0.3 per cent in the three months to June, the Eurostat statistics agency said in a second estimate. That compared with a contraction of 0.2 per cent in the first quarter, originally given as a negative 0.3 per cent.

In the full 27-member European Union, the economy expanded 0.4 per cent in the second quarter, better than the initial 0.3 per cent reading and after shrinking 0.1 per cent in the first. Compared with output in the second quarter last year, the euro zone shrank 0.5 per cent while the EU was flat.

During the same period, the United States economy grew 0.6 per cent compared with the first quarter and by 1.6 per cent compared with a year earlier.

Eurostat said the best performers in the second quarter were bailed-out Portugal with a gain of 1.1 per cent, while Germany - Europe's biggest economy - Britain, Finland and Lithuania all expanded by 0.7 per cent. The biggest contractions were in Cyprus, at 1.4 per cent, followed by Slovenia 0.3 per cent, and in Italy and the Netherlands, which both shrank 0.2 per cent in the second quarter.

When the second-quarter growth figures were first realised last month, analysts and officials welcomed the end of the recession. They also voiced concerns on the outlook as the debt crisis continues to undermine the economy and unemployment remains at record highs, dampening demand.