The eurozone economy expanded more than expected at the start of the year, official data showed on Wednesday, despite US President Donald Trump's tariffs but global trade tensions threaten more pain and near stagnation in 2025.
The EU's official data agency said the 20-country single currency area recorded growth of 0.4% over the January-March period from the previous quarter.
The figure was higher than the 0.2% forecast by analysts for Bloomberg, and comes after the eurozone economy grew by 0.2% in the final quarter of 2024. The 27-country European Union economy expanded by 0.3%, after 0.4% between October and December.
The better-than-expected data appears to be linked to advance purchases in the United States, before Trump's tariffs came into effect.
But for the year as a whole, the outlook remains lacklustre, according to experts.
Trump on April 2 slapped sweeping 20 percent levies on a majority of European goods before announcing a 90-day pause, but a worldwide 10-percent levy rate remains.
If Brussels and Washington fail to reach an agreement, the higher tariffs will kick in, unleashing chaos and a painful trade war for Europe.
But Trump's 25-percent tariffs on steel, aluminium and auto imports also remain.
"The economy started the year on a stronger footing than we expected and activity surveys suggested," said Franziska Palmas, senior Europe economist at London-based Capital Economics. "Nevertheless, we still expect growth to slow sharply in the next six months as the US tariffs introduced in April will hit activity and any boost from German fiscal stimulus will mostly be felt next year," Palmas added.
Several European companies shipped a larger number of goods at the start of the year to avoid Trump's higher tariffs.
The EU's official data agency said the 20-country single currency area recorded growth of 0.4% over the January-March period from the previous quarter.
The figure was higher than the 0.2% forecast by analysts for Bloomberg, and comes after the eurozone economy grew by 0.2% in the final quarter of 2024. The 27-country European Union economy expanded by 0.3%, after 0.4% between October and December.
The better-than-expected data appears to be linked to advance purchases in the United States, before Trump's tariffs came into effect.
But for the year as a whole, the outlook remains lacklustre, according to experts.
Trump on April 2 slapped sweeping 20 percent levies on a majority of European goods before announcing a 90-day pause, but a worldwide 10-percent levy rate remains.
If Brussels and Washington fail to reach an agreement, the higher tariffs will kick in, unleashing chaos and a painful trade war for Europe.
But Trump's 25-percent tariffs on steel, aluminium and auto imports also remain.
"The economy started the year on a stronger footing than we expected and activity surveys suggested," said Franziska Palmas, senior Europe economist at London-based Capital Economics. "Nevertheless, we still expect growth to slow sharply in the next six months as the US tariffs introduced in April will hit activity and any boost from German fiscal stimulus will mostly be felt next year," Palmas added.
Several European companies shipped a larger number of goods at the start of the year to avoid Trump's higher tariffs.
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Perishers - 1st May 2025
