EU Economy Grows 0.3% in Q1, Exiting Recession

Economy

Europe: The eurozone economy grew by 0.3% in the first quarter of 2024, marking its exit from a technical recession following two consecutive quarters of contraction, each by 0.1%. Among the major eurozone economies, Germany and France both grew by 0.2%, while Spain and Italy saw stronger growth at 0.7% and 0.3%, respectively. Despite this growth, Andrew Kenningham, Chief Europe Economist at Capital Economics, described the recovery as “quite muted,” noting that part of the growth was due to a weather-related rebound in construction activity that may not continue. 

The European Commission (EC) maintained its growth estimate for the eurozone at 0.8% for the year but revised its inflation forecast downward to 2.5%, from the previous estimate of 2.7%. The EC also expects inflation to slow further to 2.1% in 2025, nearing the European Central Bank's (ECB) target. However, the forecast remains uncertain, particularly due to global trade vulnerabilities, energy markets, and ongoing geopolitical tensions in Ukraine and Gaza. The EC cautioned that Central Banks, including the ECB, may delay rate cuts until there is a more pronounced decline in services inflation. 

Source: Yahoo Finance