Eurozone outpaces US in Q1
LONDON — The eurozone, for so long a weak pillar of the global economy, outpaced the United States in the first quarter of the year.
Official figures released on Wednesday show that the single currency bloc expanded by a solid, if unspectacular, quarterly rate of 0.5 per cent in the first three months of the year.
The increase reported by statistics agency Eurostat was in line with market expectations but may prove a slight disappointment to some in the markets following a run of other strong economic data. A number of economists had predicted a pick-up in the rate of growth from the previous quarter’s 0.5 per cent.
The eurozone nevertheless grew faster than the US economy, which during the first quarter expanded by 0.7 per cent on an annualised basis, way below the eurozone’s equivalent rate of about two per cent.
The eurozone economy has been expanding steadily since 2013 but failed to push into a high gear, largely because it battled with skyhigh debts in many countries, notably Greece.
No country breakdown was provided by Eurostat on Wednesday but surveys have shown that the recovery is becoming broaderbased across sectors and countries. Germany, the eurozone’s biggest economy, remains the fulcrum and its sustained economic expansion is expected to continue through to
Growth in Britain is widely expected to remain soft as it negotiates its EU exit
the country’s general election later this year.
There are hopes that the eurozone will pick up further steam in the second quarter following recent surveys indicating an uptick in April, particularly in France. The prevailing view in the markets is that a victory in Sunday’s presidential election for centrist Emmanuel Macron over Marine Le Pen from the far-right could further boost the eurozone’s secondbiggest economy.
A string of general elections in key eurozone states has been identified as a potential risk to economic growth this year, as populist or extremist parties could endanger the region’s commitment to the euro.
So far, defeats for populist politicians in Austria and the Netherlands have shored up confidence in the markets that there won’t be a lurch toward a break-up of the single currency or of the wider European Union itself.
However, concerns over Britain’s withdrawal from the EU will remain. In March, before calling a general election, Prime Minister Theresa May triggered the formal two-year Brexit process.
There are already signs that worries over Britain’s future are hurting the country’s economy — growth slowed to 0.3 per cent in the first quarter of the year from 0.7 per cent in the previous threemonth period.
Growth in Britain is widely expected to remain soft as it negotiates its EU exit.
The economy is expected to be hobbled by uncertainty — both businesses and consumers may put off spending until they know how the post-Brexit environment looks. And the pound’s sharp fall since last June’s Brexit vote has pushed up prices, which is weighing on consumers at a time when wage increases are modest.