Eurozone: Stronger domestic demand propels Q1 Eurozone GDP
June 5, 2015
According to more complete data released by Eurostat on 5 June, the Eurozone GDP increased 0.4% in Q1 over the previous quarter in seasonally adjusted terms, which confirmed its earlier estimate. The reading followed the revised 0.4% rise registered in Q4 2014 (previously reported: +0.3% quarter-on-quarter) and matched market expectations. Compared to the same quarter last year, GDP growth ticked up from 0.9% in Q4 to 1.0% in Q1.
According to Eurostat, domestic demand was the contributor to Q1’s GDP increase. Domestic demand increased 0.6% in Q1, which came in above the 0.4% rise tallied in Q4. The acceleration in Q1 stemmed from an improvement in private consumption (Q1: +0.5% qoq; Q4 +0.4% qoq) and firm growth in fixed capital formation (Q1: +0.8% qoq; Q4: 0.4% qoq). Public spending also contributed to overall economic growth. Government consumption grew 0.6% over the previous quarter, well above the lackluster 0.2% rise seen in Q4.
Conversely, the Eurozone’s external sector deteriorated mildly in the first quarter of this year. Exports of goods and services expanded 0.6% in Q1, marginally down from the 0.8% increase observed in Q4. Meanwhile, due to stronger domestic demand in Q1, imports picked up pace, from a 0.8% increase in Q4 to a 1.2% expansion in Q1. Therefore, the contribution from net exports to overall economic growth fell from no contribution in Q4 to a 0.2 percentage-point detraction in Q1.
Author: Ricardo Aceves, Senior Economist