Eurozone GDP grows at quickest in 2 years
Print Edition
A slowdown in Germany weighed on the eurozone in the first quarter, but the bloc’s economy still grew at its fastest in almost two years as cheap food and fuel boosted spending and a central bank stimulus program kicked in.
Gross domestic product in the 19 countries sharing the euro rose 0.4 percent quarterly for a 1 percent year-on-year rise — just below forecasts in a Reuters poll of economists.
European Union statistics office Eurostat gave no detailed breakdown with yesterday’s data, while economists said growth was likely to have been helped by lower food and energy prices, a weak euro and the asset-buying program the European Central Bank started in early March.
“It is evident that improved growth was due to strengthened domestic demand. Domestic demand was certainly behind the improved growth in France and Italy, and it also reportedly held up reasonably well in Germany,” said Howard Archer, economist at IHS Global Insight.
France outperforms
Overall, growth in Europe’s largest, and traditionally export-led, economy Germany slowed more than expected as imports rose more sharply than sales abroad.
That net drag from trade activity was replicated across the bloc as muted global growth curbed export growth despite a weaker euro, Archer said.
Germany’s GDP grew 0.3 percent on the quarter, down from 0.7 percent in the previous three months and undershooting a consensus forecast of 0.5 percent in a Reuters poll.
“Weak global trade is hitting German industry ... and if the consumers start refraining from spending too, overall economic growth will decline rapidly,” said Thomas Gitzel, chief economist at VP Bank.
The growth rate was half that of France, the bloc’s No. 2 economy, which expanded by 0.6 percent, its strongest rate in two years, boosted by a 0.8 percent rise in consumer spending.
Finance Minister Michel Sapin said the French economy would now grow faster than the 1 percent the government had forecast for 2015.
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