Euro zone economy grows 0.2%

Euro zone economic growth in the first three months of 2010 was 0.2 per cent quarter-on-quarter and 0

Euro zone economic growth in the first three months of 2010 was 0.2 per cent quarter-on-quarter and 0.6 per cent on the year, but any stronger expansion in the second quarter could be short-lived.

In its second estimate, European Union statistics office Eurostat reiterated that inventories helped the 16-country area's economy grow modestly over the period despite negative net trade, investment and consumer demand.

Inventories contributed 1.0 percentage point to overall quarterly growth, more than the 0.8 per cent reported previously.

Government spending made a neutral contribution and exports added 0.9 percentage point, slightly less than previously thought.

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Imports, however, subtracted 1.3 percentage points. Falling investment and household demand took away 0.2 percentage point and 0.1 point respectively, it said.

Many economists expect euro zone growth to accelerate to 0.4 per cent quarter-on-quarter in the April-June period, but expansion could later falter due to austerity measures ordered by many governments to avoid a sovereign debt crisis.

In the first quarter, the euro zone's two largest economies - France and Germany - expanded by 0.1 per cent and 0.2 per cent respectively from the previous three-month period.

Greece, hit by a debt crisis, contracted more than previously thought - by 1.0 per cent, compared with the previous reading of 0.8 per cent. Italy grew by 0.4 per cent, rather than 0.5 per cent as reported by Eurostat in early June.