Consumption in Eurozone

Eurozone - Consumption

Second estimate confirms growth revival in Q1

The Eurozone economy regained steam in the first quarter of the year, after suffering a sharp slowdown in the second half of 2018. According to a second preliminary estimate released by Eurostat, GDP increased a seasonally-adjusted 0.4% in Q1 from the previous quarter, doubling Q4 2018’s 0.2% expansion and matching the first release. Compared with the same quarter of the previous year, seasonally-adjusted GDP expanded 1.2% in Q1, matching Q4’s reading.

The positive result is encouraging for the Eurozone economy, which struggled last year on problems in the industrial sector and amid a less supportive global trade environment. While a full breakdown by components is not yet available, solid household spending, which was supported by a low unemployment rate and rising wages, likely powered the rebound. In addition, an improved performance by the manufacturing sector—as one-off issues faded—likely helped, while a milder-than-usual winter may have boosted the construction sector.

Additional data released by national statistical institutes across the Eurozone was mostly positive. A healthy domestic economy fueled a notable acceleration in Germany, while growth in Spain picked up and continued to outperform most of its peers. In addition, Italy exited technical recession in the first quarter, although the economic situation still remains fragile. Meanwhile, dynamics were stable in France and the Netherlands.

More comprehensive results for the first quarter, including a breakdown by components, are scheduled to be released on 6 June.

Eurozone GDP Forecast

FocusEconomics Consensus Forecast panelists expect the Eurozone economy to expand 1.2% in 2019, which is unchanged from last month’s forecast. For 2020, panelists see the economy expanding 1.4%.