The Eurozone economic growth improved significantly in the first quarter, rising 0.4% and contradicting the investors and analysts fears. This positive data comes after two quarters with a flimsy performance that was fueling fears for the future state of the economy.
Among the big Eurozone countries, France’s economy expanded 0.3%, the Italian economy rose 0.2% while Germany declined to provide information. Spain advanced 0.7 percent continuing 2018 trend. The data, provided by the European Statistical Office (Eurostat), also showed that the monetary union advanced by 1.2% (annual). Germany is expected to publish its data in a couple of weeks, but it seems that they're going to be positive.
The upsurge of the German automobile industry and growing political stability in France are among the main factors behind this momentum. The Eurozone has been in positive territory for 24 quarters, which is about six years with positive growth rates, while unemployment is consistently at minimum levels (around 7.7%) since 2008.
However, not everything is positive for the union, since some countries with high public debt levels are not enjoying the bonanza and the economic consequences of the Brexit remain to be seen. Some analysts are also skeptical of the positive data and are concerned that things will turn around in the near term.
“It is not a turning point. There is clear evidence of a trade-related exogenous shock for the eurozone economy, which cannot be easily dismissed in the aftermath of a good GDP reading,” said Italian economist Lorenzo Codogno, ex-director of the Italian Treasury Department.
However, this data is undoubtedly beneficial from ECB President Mario Draghi’s perspective, since he anticipated that the economic deceleration was a temporary phenomenon and wasn't related to an upcoming economic recession.
"In fact, the euro area faced an analogous situation in 2016, when the economy also went through a soft patch triggered by a contraction in world trade. At that time, the strength of the domestic economy was able to shield the recovery from external uncertainties,” Draghi said at the end of March, during a conference in Frankfurt.