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BRUSSELS, Mar 28 (AFP): Economic recovery is on track in the 12 countries which share Europe's single currency, but growth could lose steam if a housing price bubble bursts, the European Commission said yesterday.
In a quarterly report on the eurozone economy, the European Union's executive arm stuck with its estimate for the bloc of 1.9 per cent growth this year, after 1.3 per cent last year.
"This forecast is based on both a positive outlook for exports and-more significantly-on a progressive firming of domestic demand," said the head of the commission's economic department, Klaus Regling.
On a quarterly basis, growth bounced back in the first three months of this year after a weak end to 2005, and is expected to gather momentum in the coming quarters.
The commission said growth might even prove stronger than expected, judging by recent surveys of the main economic actors.
The improving outlook for eurozone growth is underpinned by healthy growth in exports, which have become more competitive on international markets and are benefitting from strong economic growth in China, Japan, Latin America and the United States.
Meanwhile, domestic demand is also improving thanks to growing corporate investment but also increasingly due to household consumption, which has long held back recovery in the eurozone.
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