The Eurozone, which comprises of the 17 countries which use the euro, showed an increase in their economy of 0.8% in the first quarter of 2011. The growth was largely driven by Germany, one of the powerhouses of the zone, which grew by it’s GDP by 1.5% in the period in question.
The major surprise in the results was the performance of Greece which grew by 0.8% in the three month period, despite the country likely needing a second bail out in the coming months.
The results showed once again the split in the relative strengths of the countries making up the EU, with the core axis of Germany and France continuing to show strong growth largely driven by domestic demand. In fact,France showed it’s strongest growth in GDP since 2006.
By contrast other members of the Eurozone continued to struggle, most notably Ireland, Spain and Portugal which are struggling to deal with a strong euro and high interest rates. Portugal in particular has been the latest victim of the financial crises with its economy shrinking for the second quarter running, meaning that it is now officially in recession.
The mixed fortunes of the Eurozone shows the dilemma facing the European Central Bank which must decide on a monetary policy which aids those countries which are struggling financially while not impeding the strong growth of France and Germany.
