The European economy emerged from a shallow recession in the first quarter, ending a year of virtual stagnation.
Expansion in the bloc was broad-based, with all of the biggest national economies performing slightly better than expected.
The eurozone economy grew by 0.3 percent in the three months through March, according to Eurostat figures released Tuesday. It had contracted by 0.1 percent in the the previous two quarters, and only grew by 0.1 percent the quarter before that. In year-on-year terms, output was up 0.4 percent.
Crucially, the bloc’s largest economy, Germany, recorded a return to growth, with its gross domestic product expanding by 0.2 percent after contracting in both of the previous two quarters. France’s GDP grew by the same amount, while Spain and Portugal recorded an impressive 0.7 percent growth each. Italy’s economy accelerated — up by 0.3 percent versus 0.1 percent in the fourth quarter of 2023.
While monthly data suggest services have been largely responsible for the upturn, there have also been signs recently of a stabilization in industrial production, which had been battered by the surge in energy prices in 2022, has aided the recovery. German business confidence, as measured by the Ifo institute, has been rising all year. While that hasn’t yet resulted in a strong turnaround, the Czech Republic and Hungary, two countries whose manufacturing sectors are deeply integrated with Germany’s, both reported stronger-than-expected growth in the quarter on Tuesday.
“This is not a flash-in-the-pan,” Unicredit analyst Andreas Rees wrote of the German figures. “In our view, the worst is finally behind us, as rising global trade but also lower inflation rates compared to last year will probably lead to further moderate growth in the next few quarters.”