The European economy prospered

This is the strongest quarter of performance for the euro area economy since the third quarter of 2022, according to data from the European Union Statistical Agency (Eurostat). In the second half of 2023, the eurozone economy will shrink by 0.1% per quarter.

Among member states, Ireland recorded the highest increase compared to the previous quarter, at 1.1%. Next are Latvia, Lithuania and Hungary all at 0.8%. Meanwhile, Sweden is the only country with negative growth compared to the fourth quarter of 2023.

Compared to the same period in 2023, eurozone GDP increases by 0.4% and the entire EU increases by 0.5%. The European economy prospered thanks to falling energy prices and inflation cooling to 2.4% in April. Inflation is currently not far from the 2% target set by the European Central Bank (ECB), leading to possibility of ECB cutting interest rates in June.

Along with that, Germany – the eurozone economic leader – grew by 0.2% in the first three months of the year, after a decline of 0.5% in the last quarter of 2023. France, the second largest economy in the region, reached growth of 0.2%. Meanwhile, Spain also grew by 0.7%.

However, the European economy does not have many prospects for significant takeoff. The ECB’s current record high interest rate of 4% is still an obstacle to growth because it increases credit costs for businesses and consumers.

Germany’s economy is improving but concerns about long-term challenges such as excessive bureaucracy, lack of skilled workers, and insufficient investment in infrastructure such as rail networks and high-speed Internet have not ended. high, slow digital transformation in business and administration.

Germany’s structural weaknesses will not disappear overnight and limit the pace of recovery this year, said Carsten Brzeski, global head of macro at ING bank.