Eurozone GDP growth faster than expected in the first quarter

In the first quarter of the year, seasonally adjusted gross domestic product grew by 0.4 percent in the eurozone compared to the previous quarter and by 0.3 percent in the EU. In the fourth quarter, quarterly GDP growth was 0.2 percent in the eurozone and 0.4 percent in the EU. Experts had expected eurozone growth of 0.2 percent in the first quarter of this year.

Annual GDP growth also turned out to be higher than expected: eurozone gross domestic product grew by 1.2 percent on an annual basis instead of the expected 1.0 percent. Eurozone annual GDP growth was also 1.2 percent in the fourth quarter. In the European Union, annual GDP growth was 1.4 percent in the first quarter and 1.4 percent in the fourth quarter.

The recovery was largely supported by stronger domestic demand, boosted by easing inflation, lower borrowing costs, optimism over the agreement to ease German fiscal austerity and an expected increase in defense spending in the coming months. These developments helped offset lingering concerns about the United States’ volatile tariff policy.

However, economic momentum could weaken in the coming months as the introduction of new U.S. tariffs begins to weigh on EU exports and rising uncertainty dampens investment and household consumption.

Among the larger economies, Germany’s gross domestic product expanded by 0.2 percent quarter-on-quarter. Spain and Italy achieved quarterly growth of 0.6 percent and 0.3 percent, respectively, while France and the Netherlands achieved only 0.1 percent.