The French and Spanish economies have defied expectations by growing faster than forecast in the first quarter of the year, signaling a potential turnaround for the wider eurozone. French gross domestic product expanded by 0.2 per cent, surpassing economists’ predictions of 0.1 per cent, while Spain’s economy saw a growth of 0.7 per cent, outstripping expectations of 0.4 per cent.
The positive economic data has sparked optimism in the eurozone, with inflation stabilizing in several major countries. France reported higher-than-expected consumer price growth of 2.4 per cent in April, while Spain and Germany also saw above-forecast inflation figures. The euro strengthened against the dollar following the release of the economic data, indicating growing confidence in the region’s economic prospects.
Analysts anticipate a modest pickup in eurozone growth this year, fueled by slowing inflation and rising wages. Recent reductions in borrowing costs by banks are expected to support domestic consumption, with consumer spending already showing signs of improvement in France and Germany.
However, concerns remain about France’s efforts to reduce its budget deficit, which could potentially dampen economic growth in the future. Despite this, household spending in France accelerated in the first quarter, supported by increased investment and government spending.
Spain’s strong economic performance was driven by both domestic and external demand, with investment and exports contributing significantly to growth. While government spending fell slightly, the overall outlook for the Spanish economy remains positive.
Overall, the latest economic data paints a hopeful picture for the eurozone, with expectations of continued growth and improved consumer spending in the coming months.