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Higher consumer spending underpins euro zone strong growth

[BRUSSELS] The euro zone economy grew at a robust pace in the three months to June, driven mostly by higher domestic demand and investment, official data released on Thursday confirmed.

The European statistics office Eurostat said the euro zone's expansion picked up speed in the second quarter, with the economy growing 0.6 per cent compared with the previous three months. That was in line with previous estimates and market expectations and up from a 0.5 per cent rise in January-March.

The acceleration was driven by growing consumer spending and investment, with the economy shrugging off slower export growth as a result of the strong euro .

Household consumption went up by 0.5 per cent in the second quarter from 0.4 per cent in the first three months of the year, and imports more than doubled their growth rate to 0.9 per cent from 0.4 per cent.

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Government expenditure also accelerated to 0.5 per cent from 0.2 per cent.

Higher consumer confidence and demand drove up investment, which expanded by 0.9 per cent after a 0.3 per cent contraction in the previous quarter.

Hit by the stronger euro, which is up around 13 per cent against the dollar this year, exports slowed their growth to 1.1 per cent from 1.3 per cent in the previous quarter.

Eurostat also revised upwards the data on euro zone growth on a yearly basis. The bloc's gross domestic product (GDP) expanded by 2.3 per cent in the second quarter and by 2.0 per cent in the first three months of the year, higher than previous estimates of 2.2 per cent and 1.9 per cent respectively.

The yearly figure for the second quarter was also higher than the average forecast of economists polled by Reuters who had expected a 2.2 per cent rise on the year.