Q1 GDP lays the foundation for a solid year

The strong pick-up in euro-zone GDP in Q1 brought further evidence that the region is performing well compared to the slowing US and UK economies. Admittedly, part of the 0.8% quarterly increase reflected temporary factors, which might be unwound in Q2. But Q1’s strength certainly provides a solid platform for growth in 2008 as a whole. And with survey measures such as the EC’s Economic Sentiment Indicator still pointing to a fairly moderate slowdown we maintain our above-consensus forecast for solid average GDP growth of 1.7% this year.