Cargo containers are stacked east of the banking city on the premises of the DB Transport Station. Skyscrapers on the bank’s skyline rise behind them. President Trump’s aggressive US customs policy can also be seen as a trade war against other parts of the world.
Photo by Arne Dedert/Picture Alliance by Getty Images
The eurozone economy grew by 0.4% stronger than expected in the first quarter, flash data from statistics agency Eurostat was shown on Wednesday.
The economists voted by Reuters had forecast an expansion of 0.2% in the first three months of the year, after a 0.2% growth print was revised in the last quarter of 2024.
Figures released on Wednesday show that Germany’s gross domestic product (GDP), Europe’s largest economy, rose 0.2% over the same period. France’s GDP added 0.1% to its three-month stretch.
Continuing the recent trend, Southern Europe and small economies saw GDP in Spain and Lithuania increase by 0.6%, respectively, while Italian economic output increased by 0.3%. Ireland’s economy has tended to have volatile measurements due to a high proportion of multinationals, expanding 3.2% in the first quarter.
Franziska Palmas, a senior European economist at Capital Economics, said the latest Eurozone GDP Reading showed that the region’s economy was launched with a stronger foothold than activity surveys suggest.
“Nevertheless, we expect growth to slow sharply over the next six months as the US tariffs introduced in April will be hit by activity,” Palmas said, adding that the increase from the huge fiscal stimulus expected in Germany will be felt primarily next year.
The euro was cut off on Wednesday, trading 0.08% lower at 10:35am in London after printing and 0.2% higher against the British pound. Germany’s 10-year bond yield, considered a benchmark for the Euro area, was three basis points lower.
Eurozone economic growth has been inactive for most of 2023 and 2024, despite the European Central Bank cutting interest rates in efforts to stimulate growth and boost economic activity. Its key rate, the ECB’s deposit facility rate, was reduced to 2.25% earlier this month.
The ECB in March said it expects the eurozone economy to grow by 0.9% in 2025. The new forecast was released in June, and last week, central bank policymakers have suggested to CNBC that forecasts are important in the rate decision-making process.
On the sidelines at the World Bank’s Spring Conference of the International Monetary Fund, policymakers and other economists and officials said that US tariff policy is widely and significantly as a key concern when it comes to growth.
ECB President Christine Lagarde said “the disinflation process is on a very good pace and is approaching completion.”
The European Union, including Eurozone countries, faces a comprehensive trade tariff of 20% from the US, and temporarily cut these measures along with taxation from other counterparties until July for negotiations. The EU has also put its own retaliation measures on hold. Blocks also suffer additional duties on steel, aluminum and automobiles.
Nonetheless, data released on Tuesday showed that economic sentiment in the Euro region fell in April, reaching its lowest level since December 2024.
Growth is silenced, but Eurozone inflation is approaching the ECB’s 2% target, reaching 2.2% in March. The latest inflation data release is scheduled for later this week.
