New EU figures released on Tuesday (April 30) beat analysts' expectations that the eurozone would emerge smoothly from recession in the first quarter of this year, while inflation data pushed the European Central Bank ( This indicates that expectations for a long-awaited interest rate cut by the ECB have increased. In June.
eurostatThe EU's official statistics office reported that the single currency area grew at a quarterly rate of 0.3% in the first three months of this year, after declining by 0.1% in the last two quarters of 2023. A recession is technically defined as two. Consecutive quarters of negative growth.
Analyst Voted by bloomberg FactSet had expected eurozone growth to be just 0.1%.
Sander Trudwar, senior economist at the Center for European Reform, told Euractic that the data suggests a supply shock has been triggered. Russia's full-scale invasion of Ukraine By February 2022, “things are going really well.”
“The European economy still has some life left in it,” he said. But he warned that there remained a concern, with Germany and France, the region's two largest economies, both growing at just 0.2%. “France isn’t great either,” he said.
meanwhile, eurostat reported that euro area inflation was stable at 2.4% in April, in line with analyst expectations. The ECB's target interest rate is 2%.
Core inflation, which provides a more accurate estimate of underlying price pressures by subtracting volatile food and energy prices, fell 0.2 percentage points to 2.7%, the lowest level since the start of the conflict in Ukraine.
Prices soared across the region following Russia's invasion of its neighboring country two years ago, with inflation ultimately reaching 10.6% in October 2022.
In response to soaring prices, the ECB raised interest rates 10 times between July 2022 and September 2023, raising the benchmark deposit interest rate from negative levels to a record high of 4%.
The bank has kept its key interest rate unchanged for the past five meetings.Recent polls by The Economist Reuters Media outlets such as , overwhelmingly predict that the ECB will cut interest rates at its next board meeting in June.
“[The data] “If the ECB is on track to cut interest rates in June, it will be a further blow to the European economy,” Trudoir said.
[Edited by Anna Brunetti/Zoran Radosavljevic]
