Euro-Area Economy Grows More Than Forecast as Spain Outperforms

Economic growth in the euro area strengthened more than expected in the first quarter, buoyed by resilience in France and Spain.

Gross domestic product increased 0.4 percent in the three months through March, Eurostat said on Tuesday. That’s the fastest in three quarters. Activity in the 19-nation currency bloc was helped by strong investment in Spain and buoyant consumer spending in France.

While the region’s growth rate was below the average of the past five years, it marks the second quarterly acceleration since a downturn in trade and factory activity pulled the economy close to a standstill last summer. Some countries in the bloc have yet to experience a meaningful turnaround, with Germany expected to see the weakest expansion in six years.

Business confidence continued to soften in April, and the European Central Bank has already said it won’t raise interest rates this year. Policy makers have expressed mixed feelings about whether a rebound initially penciled in for the second half will pan out. More evidence of weakness across the region could force them to make recently announced stimulus tools more accommodative to support growth.

FRANCE SPAIN
GDP 0.3% 0.7%
Consumer spending 0.4% 0.3%
Investment 0.3% 1.5%
Exports 0.1% -0.5%

While resilience in Spain and France provides a brightening picture for the region, external trade conflicts and homegrown difficulties, notably an upheaval in Germany’s car industry, have yet to clear. Italy has been in recession in the second half of 2018. GDP data at 12 p.m. will show whether that slump has ended.

 

 

bloomberg.com

 

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