Eurozone gross domestic product (GDP) grew in the first quarter of 2024, with recession in the rearview mirror.
Eurostat, the EU's statistics arm, reported a 0.3% quarter-on-quarter increase in both the euro area and the EU. GDP in the fourth quarter of 2023 decreased by 0.1%. Analysts attribute this positive increase to faster growth in the euro area's four main economies. Consumer prices in April 2024 rose by 2.4% year-on-year, mirroring the trend in March 2024.
After persistently high inflation, the region appears to be seeing light at the end of the tunnel. France, Italy, Spain and Germany all outperformed analysts' expectations, and Germany's industrial sector appears to be emerging from a downward trend.
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Expectations are high that the European Central Bank (ECB) will cut interest rates in June 2024, further boosting the euro area economy. According to Bloomberg, the financial institution expects financial stability if inflation continues to fall toward the 2% range.
Another ray of hope is that the services inflation rate fell to 3.7% in April 2024 after remaining at 4% for five months. This was helped by falling food and energy prices, which led to a slight decline from 2.9% to 2.7%. Bloomberg financial experts commented:
What the ECB needs to focus on before cutting interest rates is curbing service price inflation. Barring a wage shock or a rise in commodity prices, this will happen in June. Much higher than expected GDP growth indicates the economy is well able to withstand high interest rates…
EUR/USD closed at 1.0672 on Tuesday, April 30, 2024.
