The eurozone economy posted stronger-than-expected growth in the first quarter of 2025, expanding by 0.4% compared to the previous three months, according to preliminary data released Wednesday by Eurostat. The figure doubles the 0.2% increase recorded in the final quarter of 2024 and marks the fifth consecutive quarter of expansion for the 20-nation currency bloc.
The quarterly performance also exceeded analysts’ forecasts, which had projected a 0.2% rise, signaling a gradual pickup in economic activity despite ongoing challenges from elevated inflation and high interest rates. On a year-on-year basis, the eurozone’s seasonally adjusted GDP rose by 1.2%, holding steady from the previous quarter.
Growth across the broader European Union also remained positive, with GDP increasing by 0.3% in Q1, slightly below the 0.4% rise in the final quarter of last year. The EU’s annual GDP growth remained unchanged at 1.4%.
Among the standout performers in the eurozone was Ireland, which led all countries with a 3.2% quarterly surge. Spain and Lithuania followed with 0.6% growth each. Meanwhile, Germany, the bloc’s largest economy, returned to positive territory with a 0.2% gain after a mild contraction at the end of 2024. France showed only marginal improvement, posting 0.1% growth — just below the expected 0.2% — while Hungary was the only EU country to report a contraction, shrinking by 0.2%.
The data comes at a crucial time for European policymakers, who are managing a fragile economic recovery while maintaining tight monetary policy to contain inflation. The better-than-expected performance may provide the European Central Bank with some breathing room ahead of its next policy decision.
Despite the upbeat figures, financial markets were largely subdued. The euro traded flat at $1.1370 by mid-morning, as investors awaited key economic indicators from the United States. In bond markets, German 10-year Bund yields dipped 3 basis points to 2.46%, reversing gains made after March’s fiscal policy announcements in Berlin.
European equity markets were mixed. The Euro STOXX 50 slipped 0.3% to 5,160 points, weighed down by weakness in the banking sector. Spanish lenders Banco Santander and BBVA dropped 4.8% and 2.5%, respectively, while Deutsche Bank fell 2% amid concerns over trade tariffs. Other major banks, including Caixabank, Crédit Agricole, and Erste Bank, also saw losses between 4% and 5%.
In contrast, Germany’s DAX index gained 0.8%, supported by strong earnings from Deutsche Post, Rheinmetall, and Deutsche Börse, each rising between 2% and 3%.
The latest GDP figures offer cautious optimism that the eurozone may be regaining momentum as it heads further into 2025.
