Euro area economy performs strongly in Q1, but likely to return to weaker growth in Q2

Eurostat has released its first estimates for euro area’s Q1 GDP growth. According to Eurostat, the euro area’s seasonally adjusted GDP expanded 0.6% q/q and 1.6% y/y, much better than consensus expectations of a 0.4% growth. The euro area economy grew at a faster pace than UK’s or US economy in the first quarter, noted Lloyds Bank.

Eurostat’s preliminary release shows that France’s economy expanded at above expected rate of 0.5% q/q.  Household spending boosted the economic growth. Meanwhile, Spanish economy also performed better than expectations, growing 0.8% q/q, as compared with projections of 0.7% q/q. The economy fared well in spite of the political impasse and new elections outlook, according to Lloyds Bank.

Euro area’s survey data has hinted at a more subdued economic growth in the first quarter and the beginning of second quarter. However, the strong Q1 economic data is unlikely to last and the economy is expected to return to a weaker growth in the second quarter, said Lloyds Bank.