Yahoo Finance Eurozone economy exits recession with 0.3% growth
The eurozone economy grew 0.3% in the first three months of the year, exiting a recession at the end of last year, new data has shown.
The single currency’s gross domestic product (GDP) expanded during the January to March period, data provider Eurostat said, although it was half as fast as the UK's 0.6% expansion.
It follows two quarters in which the eurozone shrank by 0.1%, which put it in a technical recession.
Among major eurozone economies, Germany avoided recession by growing by 0.2% in the first quarter, with France likewise growing 0.2%, while Spain grew by 0.7% and Italy by 0.3%.
Euro area #GDP +0.3% in Q1 2024, +0.4% compared with Q1 2023: flash estimate from #Eurostat https://t.co/izWea1piZq pic.twitter.com/lJhjbTupnT
— EU_Eurostat (@EU_Eurostat) May 15, 2024
Andrew Kenningham, chief Europe economist at Capital Economics, said the recovery was “quite muted”.
He said: "While this is a fairly strong number, it follows two quarters during which the economy contracted. Moreover, the increase in Q1 was partly due to a weather-related rebound in construction activity which is unlikely to be repeated.
"But if activity continues to surprise on the upside the ECB may cut rates by less than the 125bp that we have pencilled in for the year as a whole.”
It came as the European Commission (EC) predicted lower inflation than previously forecast in the eurozone this year, leaving its growth estimate unchanged.
Read more: Trending tickers: Burberry, Imperial Brands, Boeing and Oracle
It said inflation, which averaged 5.4% last year, would slow to 2.5% this year, down from the February prediction of 2.7%, while it expects the single currency area to grow by 0.8%. It added that eurozone inflation in 2025 is forecast to be 2.1%, almost at the European Central Bank’s (EBC'S) target.
In its new spring forecasts, the EC said: "Global trade and energy markets appear particularly vulnerable. Moreover, persistence of inflation in the US may further delay rate cuts in the US, but also beyond, resulting in somewhat tighter global financial conditions.
"On the domestic front, EU Central Banks may also postpone rate cuts until the decline in services inflation firms."
The EU’s economy commissioner, Paolo Gentiloni, said the “forecast remains subject to high uncertainty”, pointing to wars in Ukraine and Gaza.
Watch: What is a recession and how do we spot one?
Download the Yahoo Finance app, available for Apple and Android.
