Eurozone economy grew by 0.4% in the last quarter, faster than expected, as Italy escaped its third recession in a decade * Italy: Recession is over * Eurozone unemployment lowest since Lehman Brothers failed * Eurozone beats forecasts with 0.4% growth Earlier: * Spain grew by a punchy 0.7% in last quarter * France: grew by 0.3%, but net trade contracted * Introduction: Eurozone GDP day 12.43pm BST ANA ANDRADE, research analyst at THE ECONOMIST INTELLIGENCE UNIT, reckons the eurozone economy still needs support - so don’t expect the European Central Bank to raise interest rates anytime soon! She writes: At the ECB’s last meeting Mario Draghi showed that the bank’s toolkit could be adjusted to tackle a potential severe economic downturn. The ECB signalled it was ready to go “low for longer” or even further cut rates if the euro zone headed into a recession. If the flash estimate for Q1 is confirmed at 0.4% there should be no need for this. Nevertheless, we continue to expect TLTROs [new cheap loans to banks] in very favourable terms and no hike this year as inflationary pressures remain low. 12.32pm BST PwC have helpfully drawn up this chart, showing how Spain has posted a strong recovery since the debt crisis, but Greece has really struggled: The national breakdown of the data showed the Italian economy grew in the first quarter of this year putting an end to its 6th recession in the 21st century. For France, even though output expanded by a respectable 0.3% on a quarter-on-quarter basis it was less strong than expected. However, we expect the recent tax cuts announced by the French authorities to sustain demand in the short-term, assuming households continue to spend rather than save. Finally, Spain continued to defy expectations growing at a rate of 0.7% quarter-on-quarter in line with its post Eurozone crisis average rate. The figure below shows that Spain’s GDP in level terms is now around 16% higher compared to the low it struck during the Eurozone crisis. This is the second best performance when compared to other peripheral economies, with sunny Cyprus managing to outperform others growing its economy by about 18%. Continue reading...
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