The Eurozone Economy Makes a Recovery: Positive Signs from First Quarter GDP Data
After a period of stagnation due to the energy crisis in 2022, the eurozone economy has shown meaningful growth in the first quarter of 2024. This is largely due to a more stable energy supply, which has led to lower inflation and accelerated wage growth.
The economy is performing particularly well in southern Europe, with household consumption in France and stronger investment data in Spain driving economic activity. In fact, Spain and Portugal have registered impressive growth of 0.7%, while Italy saw an acceleration to 0.3%. Germany and France also grew at a solid pace of 0.2% quarter-on-quarter.
However, despite these positive signs, the economy is still adjusting to higher interest rates and suffering from weak global demand. Real wages have not fully recovered yet, indicating a modest recovery rather than a vigorous rebound. Despite this, there are signs of improvement thanks to the encouraging GDP data in the first quarter.
The European Commission’s Economic Sentiment Indicator shows moderate service sector activity and weak manufacturing output in April. However, given that inflation remains low and unemployment at record lows, the economic environment in the eurozone looks positive for continued recovery. Overall, this suggests that better-than-expected growth is on track for the eurozone in 2024.
