Economic growth in the EU area rose markedly last year. Output expanded by more than 3 per cent in over half of the member countries, although growth was notably slower in the larger economies. The outlook continued to improve in the first half of this year. Growth in the first quarter was particularly buoyant. Eurostat figures indicate that output in the EU was some 3.3 per cent higher in the first quarter of 1998 than a year earlier. Although output rose by only 0.2 per cent in the second quarter, this was partly due to statistical distortions arising from the different number of working days in the quarter. Italy is the sole economy where growth has proved to be weaker than initially expected. The global financial crisis and slowdown in worldwide demand is expected to dampen EU growth somewhat next year, and we continue to be less optimistic than the European Commission about future prospects. Growth in the EU economies is projected to slow from 2¾ per cent this year to around 2¼ per cent in 1999.