In its third and final assessment, the European statistics agency Eurostat said gross domestic product increased by 0.6 percent from the previous quarter – the highest rate for 12 months. Year-on-year, it expanded by 1.7 percent.
Growth was supported by domestic demand, including a 0.6 percent q/q rise in household spending helped by the boost to real incomes from falling (although still high) unemployment and lower energy prices. Investment spending also increased by 0.8 percent q/q, while government consumption likewise added to overall growth. Net exports, however, remained a drag on overall growth for third consecutive quarter.
Firmer growth will provide some short-term relief over trends and help underpin risk appetite, but is unlikely to alleviate longer-term concerns. ECB President Draghi, in his press conference last week, said that the Eurozone economy would slow after a strong first quarter and there will be a need of succession of positive quarterly data to trigger a significant change in underlying Eurozone sentiment.
Eurozone first quarter GDP growth outperforms that of the US and the UK, but it is set to moderate in the second quarter. The pace of Eurozone growth is expected to slow in Q2, in line with a more moderate pace of expansion signalled from business surveys.
“For the year as a whole, the Eurozone economy is expected to grow by around 1.6 percent, matching its 2015 outturn,” said Lloyds Bank in a report.
The material has been provided by InstaForex Company – www.instaforex.com