Its economy Eurozone survived a difficult winter without falling into stagnation or even recession, coping with the shock Russian invasion of Ukraine. Even as energy prices rose sharply, real GDP rose 0.1% quarter-on-quarter in the first quarter. Easing fears of shortages natural gaseasing pressure on supply chains and increasing the number of construction projects mainly due to mild winter conditions, which contributed to a slight overall increase in economic activity.
The economic performance in the first quarter came in slightly below our forecast of 0.2%. However, this is connected with Ireland and its own paradox, namely the turbulence in transactions between subsidiaries created in the country by the American giants and themselves. So the data from Ireland and the Eurozone showed volatility. Without Ireland’s 2.7% qoq decline in GDP in January-March, after a strong recovery in mid-2022, eurozone output would have increased by 0.2% qoq over this period.
Although a breakdown of the components of demand and production is not yet available, data from key member countries indicate that incentives in export And attachments more than offset the modest decline in private consumption in early 2023. Despite weakening demand in the United States, companies appear to be able to produce and export more when key resources finally become available.
Can you remember the times when the petty term PIGS was used to refer to the European south, i.e. Portugal, Italy, Greece and Spain? Judging by the current data, it is the periphery that is the driving force behind the growth of the eurozone. Quarterly growth in economic activity in Portugal amounted to an impressive 1.6% and 0.55% in Italy and Spain. Although data for Greece for the first quarter is not yet available, the country has already outperformed other countries last year, increasing real GDP by 6.1%.
In Spain, the good news in the first quarter is mainly due to the fact that after the pandemic the economy wanted to catch up. Finally, Greece and Portugal and, to a lesser extent, Italy are benefiting from their own reforms, as well as from the help of European funds.
* Messrs. Holger Schmieding, Callum Pickering and Salomon Fiedler are economists at Berenberg Bank.
Source: Kathimerini
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