According to IMF forecasts, the euro area economy is expected to grow by 0.8% in 2024 and 1.5% in 2025.
BRUSSELS, May 1 (Xinhua) — Economic output in the euro area increased by 0.3 percent on a quarterly basis in the first quarter, the EU's statistical office said on Tuesday.
The latest data released by the EU suggests a stronger-than-expected economic recovery and an end to the recession.
As the European Central Bank's (ECB) restrictive monetary policy permeates throughout the system, inflation is gradually falling, paving the way for an economic recovery that is not yet on strong footing.
strong repulsive force
The euro zone economy grew by 0.3% in the first quarter, faster than in the fourth quarter of last year. According to the European Statistics Office (Eurostat), the euro area's GDP increased by 0.4% compared to the previous year.
The first quarter's growth rate marked an improvement from the previous quarter, when the economy contracted by 0.1%, after quarterly economic growth contracted by 0.1% in the third quarter of 2023.
This recovery was mainly due to the strong performance of the bloc's top economies.
Spain's growth continued into the first quarter, with an increase of 0.7%, the same pace as last year's fourth quarter.
Germany recorded a quarterly recovery of 0.2%, reversing negative growth of 0.5% in the fourth quarter of 2023. Despite being the eurozone and EU's largest economy, Germany was one of the worst countries in terms of economic growth. .
France's GDP also increased by 0.2%, slightly higher than in the fourth quarter of 2023.
Italy's economy expanded by 0.3%, exceeding the 0.1% growth rate seen in the previous quarter.
The eurozone's growth rate in the first quarter was the fastest since the third quarter of 2022, according to data released by Eurostat.
stable inflation
The ECB has kept interest rates at historically high levels after raising interest rates by 450 basis points in just over a year in a bid to curb soaring prices in the euro zone.
Although interest rates are restrictive, they are keeping borrowing costs high, reducing demand and weighing on economic growth in the euro area.
Inflation and consumer spending are likely to determine the pace of the eurozone's recovery, according to a report published in April by consulting firm Deloitte.
In a separate release on Tuesday, Eurostat said preliminary estimates showed euro zone inflation was 2.4% in April, flat with March.
Core inflation, the rate of inflation that excludes food and energy, fell to 2.7% in April from 2.9% in March.
Bart Collin, senior economist at ING Bank, said in a note that there are signs of a recovery in domestic demand in the euro zone, which could lead to a prolonged period of inflation.
As energy prices continue to fall and food price pressures ease, core inflation, in which wages and prices set by businesses play a key role, is becoming stickier, Deloitte said in a report.
fragile recovery
Collaine said Tuesday's figures showed the eurozone economy was “entering a clearly positive phase of economic recovery”.
But he warned that weak global demand, rising interest rates and slow real wage growth remained weighing on the euro zone economy, with “no signs of a strong recovery in sight.”
A survey conducted by the European Commission (EC) also highlights the difficult situation. The Economic Sentiment Index (ESI), a survey barometer designed to gauge economic sentiment, fell slightly in April in both the EU and the euro area.
According to the EC, the consumer confidence index in April remained well below the long-term average.
A report released by the International Monetary Fund (IMF) in April predicted that growth in the euro zone would accelerate this year from “very low levels”.
According to IMF forecasts, the euro area economy is expected to grow by 0.8% in 2024 and 1.5% in 2025. ■
