The European Commission today trimmed forecasts for euro zone economic growth in the first and second quarters of 2003 amid weak demand, a sluggish US economy and uncertainty linked to the war in Iraq.
A Commission model forecast quarterly change in the euro zone's gross domestic product ranging from a contraction of 0.2 per cent to an expansion of 0.2 per cent in the first quarter. Its forecast for the second quarter ranged from 0.1 to 0.4 per cent.
In March, the Commission expected GDP to register between -0.1 per cent contraction and 0.3 per cent growth in the first quarter of 2003 and between 0.2 per cent and 0.5 per cent growth in the second quarter.
Eurostat, the EU's statistical office, trimmed figures for euro zone Q4 2002 GDP growth to 0.1 per cent quarter-on-quarter from an initial estimate of 0.2 percent.
On a yearly basis, Q4 GDP growth was unchanged at 1.3 per cent. The Commission said weakness in domestic demand, as captured by car registration data, explained its mild downward revision for first quarter estimates. In the second quarter the revision was linked to "lack of momentum in the US economy".
"These forecasts are surrounded by an unusual degree of uncertainty related to the war in Iraq," the Commission said in a statement. The Commission had already said uncertainties linked to the Middle-East situation weighed on the forcasts when it released its first GDP growth estimates on March 6th.