The euro zone beat growth expectations at the start of the year and helped avoid recession, with the single currency bloc's overall gross domestic product expanding 0.3% in the first three months of the year, statistics agency Eurostat said on Tuesday.
This marks the end of the euro zone's shallow technical recession after GDP fell 0.1% in both the third and fourth quarters of last year.
It also saw the euro area's strongest quarterly growth since the third quarter of 2022, helped by better-than-expected growth in Germany, France, Italy and Spain.
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German output rose 0.2 percent in the first quarter of the year from the previous quarter, while French economic growth accelerated by a better-than-expected 0.2 percent, up from the 0.1 percent growth recorded in the October-December period.
Italy's GDP grew by 0.3%, Spain's GDP by 0.7% and Portugal's GDP by 0.7% while Austria's figure also beat expectations with an expansion of 0.2%. The European Union as a whole also grew by 0.3%.
“Ireland (+1.1%) recorded the largest quarter-on-quarter increase, followed by Latvia, Lithuania and Hungary (all +0.8%),” Eurostat said.
“Sweden (-0.1%) was the only Member State to record a decrease compared to the previous quarter. Year-on-year growth was positive in nine countries and negative in four.”
“The outlook is likely to improve further throughout the year, encouraged by expectations of interest rate cuts,” Sam Miley, CEBR's managing economist and head of forecasts, said.
The news came after consumer price inflation across the euro zone remained at 2.4% in the 12 months to April, the same as in March.
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Services inflation slowed to 3.7% from 4%, while food, alcohol and tobacco inflation rose to 2.8% from 2.6%. Prices of non-energy industrial goods fell to 0.9% from 1.1%.
The economy has been supported by lower energy prices due to higher oil and gas prices following Russia's invasion of Ukraine in 2022.
“Euro zone inflation was in line with expectations but, as elsewhere, is proving to be more volatile than expected,” said Neil Birrell, chief investment officer at Premier Mitten Investors.
“But the economy is performing well and overall the ECB can probably stay on track to be the first of the major central banks to hit the 'cut' button on interest rates in June.”
“The euro area outlook is improving at a time when the outlook for other economies is becoming doubtful.”
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