Eurozone Growth at 2-Year High

FRANKFURT, Germany (AP) -- Economic growth across the 19-country eurozone was higher than previously thought in the first quarter of the year, official figures showed Friday, further good news for policymakers at the European Central Bank as they deliberate whether to ease up on their efforts to stimulate the region's economy.

Eurostat, the European Union's statistics agency, said Thursday that economic growth across the region was a quarterly 0.6 percent in the January to March period, 0.1 percentage point up on the previous estimate. The rate is the highest in two years and backs up a raft of indicators showing that the recovery has picked up momentum.

The revision was due to higher than anticipated growth in France, Italy and Greece. France, the eurozone's second-largest economy behind Germany, saw quarterly growth of 0.4 percent against 0.3 percent beforehand, while Italy, the number 3, expanded by 0.4 percent instead of 0.2 percent. The most dramatic change was seen in Greece, which had previously been considered to have been in recession. Instead, it grew by 0.4 percent during the first quarter instead of a 0.1 percent decline.

All told, eurozone growth during the first quarter was double that of the U.S., a welcome development for the central bankers at the ECB ahead of their latest policy decision Thursday afternoon in Tallinn, Estonia.

Despite the rosier growth, few in the markets expect the ECB to announce any change in its stimulus program, largely because inflation remains too low for comfort. Though inflation in the eurozone is higher than it was for much of the past two years, that's largely because of a pick-up in oil prices, and it remains below the ECB's target rate of just below 2 percent. In the year to May, inflation slowed to an annual rate of 1.4 percent.

As such, most economists think Mario Draghi, the ECB's president, will acknowledge the improved growth but hold off from announcing any change to the bank's array of stimulus programs. The ECB has slashed interest rates, including its main one to zero, and embarked on a big bond-buying stimulus program to keep a lid on market interest rates. Its primary aim is to get inflation back toward its target and then to start easing off the bond-buying program.

Draghi is likely at some point this year to signal that the bank plans to ease off its bond-buying stimulus program, but most analysts do not expect him to do so Thursday.

"Strong growth and low inflation probably allows Draghi to be upbeat but hold back from big changes today," said Jim Reid, a strategist at Deutsche Bank.