May 14, 2011
The euro-zone economy expanded at a rate of more than 3% in the first quarter, outpacing the U.S. and adding to the distance between the bloc's strengthening northern tier and its debt-ridden periphery.
The figure underscores several dominant themes in Europe: A wide gap persists between wealthy, globally competitive countries in the north, and moribund economies such as Greece and Portugal that are unable to find new sources of private growth to replace a shrinking public sector.
The so-called core of Germany and its neighbors is increasingly decoupling from the debt crisis in Southern Europe and Ireland. That is a dilemma for the European Central Bank, which likely will be forced to combat signs of overheating in Germany and elsewhere with higher interest rates, even at the risk of doing further damage to the periphery.
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