The European economy showed signs of improvement at the beginning of the year, with a 0.3% growth in the January-March quarter compared to the previous three months. This marks the strongest performance for the 20-country eurozone since the third quarter of 2021, following shrinkage in the previous quarters. The improvement was attributed to easing inflation burdens on consumers and a slight recovery in the German economy, which had been stagnant.
High inflation and energy price spikes had previously hindered economic growth, but these issues have begun to ease as energy prices fell and inflation decreased to 2.4% in April. However, high interest rates set by the European Central Bank to combat inflation have raised the cost of credit for businesses and consumers. Speculation suggests that the central bank may consider cutting its benchmark rate in June to further support economic growth.
Germany, which is still dealing with bureaucracy and skilled labor shortages, expanded by 0.2% in the first quarter of the year after contracting by 0.5% in the previous quarter. Despite this positive development, concerns remain about long-term issues like infrastructure investment and digital technology adoption. France also saw a 0.2% growth, while Spain performed well with 0.7% growth. Ireland, with a 1