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 growth is attributed to a more stable energy supply, resulting in lower inflation and accelerated wage growth that benefits consumers.
Household consumption in France and stronger investment data in Spain have boosted economic activity in southern Europe, outperforming the north with Spain and Portugal registering 0.7% growth. Italy saw an acceleration to 0.3%, while Germany and France both grew at 0.2% quarter-on-quarter. Despite signs of improvement, the European Commission’s Economic Sentiment Indicator shows moderate service sector activity and weak manufacturing output in April.
The eurozone economy is still adjusting to higher interest rates and suffering from weak global demand, which has impacted real wages that have not fully recovered yet, indicating a modest recovery rather than a vigorous rebound. Despite these challenges, GDP data for the first quarter shows promising results for continued recovery with inflation remaining low and unemployment at record lows.
