E.U. economic performance "best in ten years"

In its autumn economic report, the E.U. executive predicted an average annual growth rate this year of around four per cent in the 13 candidate nations seeking to join the Union, almost twice as high as in 1999.

Average growth of gross domestic production (GDP) in the E.U. would slow down marginally to 3.1 per cent in 2001 and to 3 per cent in 2002, largely because of the "abrupt hike in oil prices" the European commission cautioned.

The rise in fuel costs would impact most strongly on E.U. inflation, raising rates from 1.1 per cent in 1999 to 2.3 per cent in 2000, the commission said.

But the E.U. agency insisted that "solid domestic fundamentals" including high domestic and world demand for European goods and services, job creation and moderate wage developments, would continue to ensure economic expansion in the bloc.

Public finances were improving largely due to buoyant windfall revenues from sales of third generation mobile communication licenses, the commission said.

But the E.U. executive warned that structural consolidation efforts in member states were waning as governments used a part of the budget surpluses for tax cuts.

In its first-ever economic forecasts for candidate nations, the commission predicted an average four per cent increase in growth in 2000, mainly due to the sharp recovery in Turkey.

GDP growth in the group would range from around two per cent in Lithuania, Romania and Slovakia to more than five per cent in Bulgaria, Estonia, Hungary, Poland and Turkey, the commission said.

(la/dpa)