euro area economy It expanded in the first quarter after two consecutive years of decline, as strong performance in all four major economies raised hopes for a sustained recovery this year.
Gross domestic product (GDP) rose by a stronger-than-expected 0.3% in the fourth and third quarters of 2023, according to preliminary figures from Eurostat, after falling by 0.1% in each of the fourth and third quarters of 2023.
GDP growth in the first quarter was expected to be only 0.1%.
In this way, the single currency economy recovered from a technical recession defined as two consecutive quarters of negative growth.
On an annualized basis, GDP growth accelerated to 0.4% from 0.1% in the previous quarter. This was also higher than the expected 0.2%.
Germany's economy grew by a better-than-expected 0.2% last quarter, in contrast to a revised 0.5% decline in the prior quarter.
Supported by strong domestic final demand, France's economic growth rate doubled to 0.2% from 0.1% in the fourth quarter.
Italy's GDP growth rate accelerated from 0.1% to 0.3%. This is his third consecutive quarter of expansion.
Spain recorded much faster growth compared to its peers, increasing by 0.7%, similar to the growth in the fourth quarter.
The economies of other euro members including Ireland, Portugal, Belgium and Austria also grew in the first quarter, according to preliminary data.
ING economist Bert Koline said the continued modest recovery puts the currency bloc on track for faster-than-expected growth in 2024.
The economist added that the economic environment in the euro area is currently improving, with inflation remaining relatively benign and unemployment at record lows.
Separate data from Eurostat showed the eurozone harmonized inflation rate held steady at 2.4% in April, in line with economists' expectations.
Core inflation, which excludes energy, food, alcohol and tobacco prices, slowed to 2.7% from 2.9%. However, the core interest rate was slightly higher than the expected 2.6%.
The harmonized index of consumer prices in April increased by 0.6% from the previous month, and the core consumer price index increased by 0.7%.
The European Central Bank is widely expected to cut interest rates at its next policy meeting in June, with inflation expected to start returning to its 2% target in the coming months.
Written by Renju Jaya
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