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(4) Economic Situation
From the second half of 2005, given the euro’s weakness
against the dollar, exports increased and there was a
recovery in capital investment, leading to moderate
recovery in the European economy. However, given the
low rate of growth that persisted from the second half of
2004 to the first half of 2005, GDP growth in 2005 was
expected to remain at 1.3% over the preceding year in the
Eurozone, and 1.5% in the 25 EU member states. In addition,
the unemployment rate in the Eurozone rose to
8.9% in 2004, and is expected to drop to 8.6%, which is
still at a high level (the rate for 25 EU member states is
forecast at 8.7%).

Integration and enlargement are increasing the EU’s
influence in the international community, and the EU is
an important partner for Japan, as both share basic values
such as freedom, democracy, the rule of law and human
rights, and face a variety of common international issues.
Japan will continue to advance dialogue and cooperation
with the EU, building even firmer relations.

The euro’s exchange rate against the dollar has been
on a downward trend from the beginning of the year
2005, due to the factors including difference in growth
rates between the Eurozone and the United States (US)
and differences in interest rates. This downturn
improved the competitiveness of Eurozone exports.

and the European Council failed to reach
agreement in a meeting in June on a midterm financial
perspective for the period of 2007-2013, which should
have determined the budgetary framework for the newly
enlarged 25-member European Union (EU),



Furthermore, the Japanese government promoted
cooperation with the business sectors of both Japan and
the EU in the EU-Japan Business Dialogue Round Table
(BDRT) held in July 2005. Japan also worked to promote
the interests of Japanese companies operating in the EU
member states, and improved bilateral trade and investment
as well as the business environment through
various dialogs such as the Japan-EU Regulatory Reform
Dialogue held in March and November 2005.




Ministry of Foreign Affairs – Japan