Eurozone economic growth in the second half of this year and especially in early 2007 will be slower than previously expected, the European Commission forecast today.
Separately, European Union statistics office Eurostat confirmed the strong April-June quarterly growth figures for the 12 countries using the euro currency.
The Commission cut its quarterly gross domestic product (GDP) growth forecast for the third quarter to a range of 0.4-0.8 per cent from a prediction of 0.5-0.9 per cent which was made in August.
For the fourth quarter, the Commission said it expected quarterly growth in the range of 0.2-0.7 percent, down from 0.4-0.9 per cent.
In the first quarter of 2007, the Commission said growth would slow to a range of zero to 0.5 per cent, against the previously forecast 0.2-0.8 per cent.
The European Union executive did not not give an explanation for the change of forecast.
Economists have long expected the first quarter of next year would show a slowdown because of a rise in value added tax in Germany, the euro zone's biggest economy, which is likely to stifle private demand.
Eurostat confirmed that euro zone second-quarter growth was the strongest in six years reaching 0.9 per cent quarter-on-quarter after a 0.8 per cent gain in the previous three months, driven mainly by investment and household demand.
Eurostat also revised up the year-on-year growth figures for the first and second quarters to 2.2 and 2.7 percent respectively from 2.1 and 2.6 percent respectively.
Meanwhile, the European Trade Union Confederation (ETUC), the EU's biggest labour group, urged the European Central Bank on Wednesday not to raise interest rates any further so as not to hurt the euro zone economy.
"I hope they [the ECB] won't act any further than they have already done," ETUC general secretary John Monks said. "In our view they have already done too much."
Markets expect the ECB to raise interest rates by 25 basis points to 3.5 percent in December, and possibly again in 2007, amid strong economic growth and fast credit expansion.