Eurozone growth doubles expectations in Q1 as southern economies lead

FRANKFURT: The eurozone economy expanded at twice the pace analysts had forecast at the start of the year, with southern European countries driving the upswing, German Press Agency (dpa) reported.According to preliminary data from European Union statistics agency Eurostat on Wednesday, gross domestic product (GDP) in the 20-member currency bloc rose by 0.4 per cent in the first quarter (Q1) compared to the previous three months.

Economists had expected growth of just 0.2 per cent. The fourth quarter of 2024 also saw a 0.



2 per cent expansion.Among the eurozone's largest economies, Spain posted the strongest growth with a 0.6 per cent gain, followed by Italy at 0.

3 per cent, Germany at 0.2 per cent, and France at 0.1 per cent.

"Southern Europe remains the growth engine," said Thomas Gitzel, chief economist at VP Bank, pointing to a likely boost from a strong tourism season.Export-oriented economies like Germany, however, are increasingly vulnerable to geopolitical tensions and trade uncertainty.In particular, concerns are mounting over a protracted tariff fight with US President Donald Trump, which economists warn could weigh heavily on eurozone trade later this year.

To support the economy amid these headwinds, the European Central Bank cut interest rates in April for the seventh time since last summer, aiming to stimulate demand by lowering borrowing costs for businesses and consumers.On a year-on-year basis, eurozone GDP grew by 1.2 per cent in the first quarter, slightly above the 1.

1 per cent forecast by economists and matching the growth rate seen in the final quarter of 2024.© New Straits Times Press (M) Bhd.