In the first quarter of 2024, the eurozone economy showed meaningful growth after a period of stagnation following the energy crisis in 2022. The region is benefiting from a more stable energy supply, resulting in lower inflation and accelerated wage growth to benefit consumers.
Household consumption in France and stronger investment data in Spain have boosted economic activity in southern Europe, outperforming the north with Spain and Portugal registering 0.7% growth. Italy saw an acceleration to 0.3%, while Germany and France both grew at 0.2% quarter-on-quarter.
However, the economy is still adjusting to higher interest rates and suffering from weak global demand. Real wages have not fully recovered, indicating a modest recovery rather than a vigorous rebound. Despite signs of improvement, the European Commission’s Economic Sentiment Indicator shows moderate service sector activity and weak manufacturing output in April.
Following the encouraging GDP data in the first quarter, the eurozone is on track for better-than-expected growth in 2024. With inflation remaining low and unemployment at record lows, the economic environment in the eurozone looks positive for continued recovery.