GDP
Eurozone GDP grew 0.3% in Q1 2025, led by Spain and Ireland, but Q2 outlook weak due to falling confidence, softer consumption, and low investment.
Eurozone GDP grew by 0.3% (revised down from 0.4%) in the first quarter of 2025, driven primarily by stronger net exports, likely boosted by front-loaded shipments ahead of anticipated US tariffs. Among the major economies, Spain led with a solid 0.6% increase, followed by Italy at 0.3%. France and the Netherlands recorded more modest growth, both at 0.1%. Germany narrowly avoided a technical recession by rebounding 0.2% after contracting 0.2% in Q4 2024, supported mainly by household consumption and a slight recovery in investment. However, Germany’s broader economic outlook remains fragile due to ongoing structural challenges, industrial stagnation, and external headwinds, with growth for 2025 forecast to remain very low. Ireland stood out with a sharp 3.2% surge, largely driven by multinational corporations, contributing significantly to overall Eurozone growth. Despite these positive results, the outlook for the second quarter is less optimistic. Business and consumer confidence have declined, consumption growth is softening, investment remains cautious amid persistent uncertainty, and earlier export gains are likely to reverse. These factors suggest the Eurozone’s economic momentum will slow in the coming months, pointing to a more challenging environment ahead.
We expect lower growth ahead for the Eurozone as declining confidence, softer consumption, cautious investment, and reversing export gains weigh on the economy.