Brussels: The Euro-zone economy is set to grow by 1.4 per cent in 2002 and by 2.9 per cent in 2003, the EU Commission said on April 24, bolstering signals from Germany and the European Central Bank that recovery has replaced weakness at the end of 2001.

In the whole of 2001 Euro-zone economies grew by 1.5 per cent, data from the EU's statistics branch Eurostat showed on April 11, although they contracted by 0.2 per cent in the last quarter.

For the entire 15-nation European Union, the commission forecast growth in 2002 of 1.5 per cent and 2003 growth of 2.9 per cent, after 1.6 per cent last year. In 2000 the economies of both zones grew by 3.3 per cent.

The commission commented in a summary of its semi-annual outlook, "A gradual recovery is shaping up as confidence returns, depleted inventories are rebuilt and international trade picks up."

The recovery would gather momentum in the first half of this year owing to private consumption before accelerating further in the second half, it said.

"An average (Euro-zone) growth of close to 3.0 per cent is forecast for next year," the commission added.

On April 23, the president of the European Central Bank (ECB), Wim Duisenberg, said that the Euro zone was set for recovery although the strength of the upturn was not clear.

However, the ECB warned that growth would be damaged if Euro zone countries did not eradicate their public deficits as they are committed to doing, and that pressures wage increases were causing concern on the inflation front.

In Berlin, six leading German forecasting institutes on April 23 said that Germany, the biggest economy in the 12-nation Euro zone, was on the verge of recovery.