The eurozone economy grew by more than previously estimated in the first quarter and at its fastest rate in two years, EU statistics agency Eurostat said on Thursday, ahead of a European Central Bank meeting that kept policy unchanged. Eurostat said the 19-country eurozone expanded by 0.6 percent quarter-on-quarter and by 1.9 percent year-on-year.
That compared with earlier estimates of 0.5 and 1.7 percent respectively. The higher figure resulted from revisions for France and Italy, with domestic demand the overall driver, particularly investment. Gross fixed capital formation was 1.3 percent higher in the quarter and up 6.0 percent year-on-year. On an annualised basis, the eurozone economy was expanding at a rate of 2.3 percent in the Jan-March period, far outstripping the 1.2 percent rate of the United States.
Capital Economics said that purchasing manager surveys pointed to a potential pick-up to 0.7 percent growth in the second quarter. The first quarter growth rate was the highest since the first three months of 2015, when the ECB first began printing money to boost inflation and stimulate growth. Solid economic growth but subdued inflation has left the ECB in a quandary. ECB President Mario Draghi is yet to be convinced that a recent rebound of inflation is durable because wage growth remains sluggish. Eurostat said gross fixed capital formation contributed 0.3 percentage points, household consumption 0.2 points and government consumption 0.1 points to the first-quarter growth figure. The contributions of external trade and inventories was neutral.