In 2006 the economy in the Eurozone strongly expanded pushed by domestic demand as well as a trade surplus. According to the Munich based ifo-Institut economic prospects continue being promising in the near future. In real terms GDP is forecast to rise by 0.5% in the first quarter of 2007 and by 0.6% in both the second and third quarter. The institute also thinks that industrial output will continue expanding at a sound pace. The above figures are based on the »Euro-zone Economic Outlook» which is a European economic forecast published jointly this afternoon by the ifo institute, the INSEE in Paris and ISAE in Rome.
Despite VAT increase in Germany consumption is forecast to increase by 0.4% in the first quarter of 2007 and further to 0.6% in the third quarter this year. Consumption is exptected to be stimulated to a large extent by a positive development on the labour market. Investment is set to continue its strong growth. On the assumption that oil prices fluctuate within a range of between 60 and 65 US dollars a barrel and the Euro-Dollar exchange rate remains at its current level, inflation rate will fall by 1.6% in the second quarter and slightly increase to 1.7% in the third quarter of 2007.