Forex

FRANKFURT- The European Central Bank said euro zone GDP growth is unlikely to be above 0.4 pct in the first quarter, but the economy is continuing to expand.

Euro zone growth slowed to 0.4 pct in the fourth quarter of last year and is likely to remain moderate in the first quarter, the ECB said in its March monthly bulletin.

'The survey results for both the industrial and services sectors suggest that GDP growth rates in the first quarter of 2008 might not be higher than in the fourth quarter of last year, although remaining positive,' it said.

'Survey data indicate that the pace of growth remained relatively slow in the first two months of 2008,' it said.

The euro zone purchasing managers index for the manufacturing sector and the EU Commission's industrial confidence indicator are pointing to a moderation in industrial activity, and a similar picture of relatively slower growth can be seen in the services sector, it said.

However, the outlook for private consumption remains broadly positive because of continued favourable labour market conditions, it added.

'Despite the dampening effect of higher commodity prices, consumption growth should continue to contribute to economic expansion, in line with rising employment,' it said.