Tuesday's inflation data is likely to confirm the European Central Bank's (ECB) decision to cut interest rates in June.
BRUSSELS, April 30 (Xinhua) – The euro zone economy grew modestly in the first quarter of this year, although economists cautioned against overstating the economic recovery.
Both the euro zone and European Union (EU) economies expanded by 0.3% quarter-on-quarter in the first quarter of 2024, according to data released by European statistics agency Eurostat on Tuesday.
Gross domestic product (GDP) decreased by 0.1% in the euro area in the fourth quarter of 2023, but remained stable in the EU.
Europe's two largest economies, Germany and France, grew by 0.2% in the first quarter, while Italy and Spain posted growth rates of 0.3% and 0.7%, respectively.
Smaller economies such as Ireland, Latvia, Lithuania and Hungary showed strong growth over the period, with Ireland expanding by 1.1% and the other three expanding by 0.8% each.
“Eurozone GDP grew by 0.3% in the first quarter, the highest growth rate since the start of the energy crisis in the third quarter of 2022,” said Bart Koline, senior eurozone economist at ING Bank. ” he said.
However, he cautioned that the current economic recovery should not be overstated. “Unlike post-pandemic, the economy is still suffering from weak global demand, real wages have not recovered to 2021 levels, and are still adjusting to rising interest rates. “There has not been a strong recovery,” he said. he added.
Collaine also pointed to the European Commission's economic sentiment indicators, which showed April was once again disappointing, with service sector activity slowing and manufacturing production slowing. He said the eurozone economy looked “mixed” at the beginning of the second quarter.
The eurozone's annual inflation rate was stable at 2.4% in April, preliminary data from Eurostat showed.
Prices for services, which are currently the main driver of inflation, rose 3.7% year-on-year, down from a 4% rise in March.
The annual inflation rate for food, alcohol and tobacco prices rose to 2.8% in April from 2.6% the previous month. The year-on-year inflation rate for non-energy industrial products was 0.9% this month, down from 1.1% in March.
Energy prices continued to fall, with the annual inflation rate reaching -0.6% in March, an improvement from -1.8% in the previous month.
“The headline numbers were flat because food inflation accelerated from 2.6% to 2.8% and energy prices fell more slowly from -1.8% to -0.6% compared to April last year,” Koline said. he explained.
Tuesday's inflation data is likely to confirm the European Central Bank's (ECB) decision to cut interest rates in June.
Global firm AXA Investment Managers maintained its long-held expectation that the ECB would cut interest rates three times this year, in June, September and December. ■
