The Eurozone economy showed significant growth in the first quarter of 2024, with household spending in France and stronger investment data in Spain boosting economic activity in southern Europe. Despite this, the north still lagged behind, with Italy accelerating to 0.3%, while Germany and France posted 0.2% quarter-on-quarter growth.
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, indicating a modest recovery rather than a strong one. Despite this, the European Commission’s economic sentiment indicator shows moderate service sector activity and weak manufacturing in April.
The encouraging first-quarter GDP data suggests that the eurozone is on track for better-than-expected growth in 2024. With inflation still low and unemployment at record lows, the economic environment in the eurozone looks positive for continued recovery. However, there are still challenges ahead, including ongoing concerns about energy supply and geopolitical tensions that could negatively impact global demand.