Euro zone economic growth accelerated as expected in the first quarter against the previous three months, but the European Commission cut its second quarter growth forecast.
European Union statistics agency Eurostat said the 12-nation euro zone's economy expanded by 0.5 per cent quarter-on-quarter in the January-March period, up from 0.2 per cent growth recorded in the last quarter of 2004.
The quarterly growth was lead by a 1 per cent increase in the biggest economy Germany, while Italy recorded a 0.5 per cent contraction of its gross domestic product, showing it was in recession after a 0.4 per cent GDP fall in the fourth quarter.
Year-on-year the euro zone's GDP grew 1.4 per cent in the first quarter, down from 1.6 per cent in the fourth quarter.
After a raft of data showing a decline in business activity and sentiment in April, the European Commission cut its forecast for euro zone quarterly growth in the second quarter by 0.1 percentage point to a range of 0.2-0.6 per cent. It forecast the same range for third-quarter growth.
The modest euro zone growth figures, where domestic demand is stifled by a high unemployment rate of 8.9 per cent, contrast sharply with those of the United States, where GDP rose 0.8 per cent in the first quarter and grew 3.6 per cent year-on-year.
Eurostat said that in the whole 25-nation EU, GDP grew by 0.5 per cent quarter-on-quarter, up from 0.3 per cent in the previous three months, and 1.7 per cent from the same quarter of 2004, down from 1.9 per cent the quarter before.