The economic growth in the euro-zone will be accelerated in the second half of this year, said a report issued by the European Commission (EC) on Thursday.

"There are signs of acceleration in economic activity in the second half of 2005," said the EC's Quarterly Report on the Euro-Area.

"Strengthening business confidence, an increase in industrial production and continued favorable financing conditions are among the factors suggesting that the recovery in the euro area is gaining momentum," it said.

In the first and second quarters of this year, the euro-zone separately registered 0.4 percent and 0.3 percent in the gross domestic product (GDP) growth.

The increase in the first half of this year was "an improvement" as compared with the last quarter of 2004, but remained "modest," the report added.

Nevertheless, the risks that hinder economic growth for the second half of the year still linger, the EC warned.

The report cited surging oil prices as a top element that might brake the growth.

"Indeed current future prices indicate that the (oil) price will remain above 60 dollars in the medium to longer term," it said.

The EC believes that the high level of oil prices increases risks of inflationary pressures although core inflation has remained unchanged since June in the zone.

The other side of the coin is that the imports by oil exporting countries are on the rise to the benefit of euro-zone exporters.

"Norway and the Commonwealth of Independent States increase (imports) by more than 50 percent since the beginning of 2003. In the meantime, total euro-area exports have increased by 25 percent," said the report.

The report also said global current account imbalances are an additional risk factor for the euro-zone economy.

Final negative element is, according to the report, that government bond yields and risk premiums on corporate bonds have declined to historical lows.

Source: Xinhua