Eurozone Economy Skirts Recession In Q1

(RTTNews) - The euro area dodged a recession in the first quarter that was widely anticipated a few months ago, thanks to the slowing energy price growth, fiscal stimulus and unwinding zero-Covid policy in China.

Gross domestic product grew 0.1 percent in the first quarter after staying flat in the preceding period, preliminary flash estimate published by Eurostat showed Friday. The rate was slightly weaker than economists' forecast of 0.2 percent expansion.

On a yearly basis, economic growth slowed to 1.3 percent from 1.8 percent in the fourth quarter. GDP was expected to advance 1.4 percent.

The meager economic growth in the first quarter along with high divergence across member states is better than feared, ING economist Carsten Brzeski said. But clearly there is no reason to cheer, the economist added.

The International Monetary Fund forecast growth in the euro area to ease sharply to 0.8 percent in 2023 before improving to 1.4 percent next year.

The quarterly change in GDP across the 20-nation currency bloc ranged between 2.7 percent contraction and 1.6 percent growth. Among the big-four economies, Spain and Italy fared better than Germany and France.

The German economy stagnated with the fall in household and government spending offsetting the improvements in capital formation and exports. GDP was flat after contracting 0.5 percent in the fourth quarter.

After posting zero expansion, France's GDP grew moderately by 0.2 percent on robust foreign demand in the first quarter.

Underpinned by gross fixed capital formation and exports, Spain expanded for the fourth straight quarter. GDP grew 0.5 percent after rising 0.4 percent a quarter ago.

At the same time, Italy posted a rebound of 0.5 percent, reversing the fourth quarter's 0.1 percent contraction. Data showed that the EU27 economy grew 0.3 percent sequentially taking the annual growth to 1.3 percent in the first quarter.