The eurozone economy grew 0.4%in the first quarter of 2025, doubling what most analysts were expecting. The data came from Eurostat on Wednesday, showing a stronger product than expected, even if the region deals with US trade tariff pressure and slow confidence in consumers.
Most economists surveyed by Reuters had predicted the growth of the quarter by only 0.2%. This would have responded to the amended figure since the last quarter of 2024.
But instead, the smaller countries of the block outperformed ordinary power stations, dragging numbers, while larger economies like Germany and France barely moved.
The South Economics make a heavy lifting
Germany, which manages the eurozone, posted a 0.2% shock for the Q1. This number was issued on Wednesday by the German Federal Statistics Estonia and was adapted to price, season and calendar differences.
The Agency said that growth was due to increased consumer spending and capital formation, which means that households bought more and companies invested more than late last year.
This growth was followed by 0.2%in the third quarter of 2024, which means that in Germany, it was able to prevent technical recession – defined by two straight quarters recession. But it was not a setback. The country has been stuck in the stall for over a year. Every three months it crawls or slides back.
Other German sectors are still in trouble. Car production is under the pressure of competition with China. House construction, infrastructure and public investments remain weak due to high costs and bureaucratic delays. All of this is the most important trade partner of the country, the United States, continues to export new tariffs.
As part of the European Union, Germany will stand the 20% blanket of goods in the United States, which was temporarily set to 10% during the negotiations, but this pause expires in July. The country is also captured by specific liabilities of steel, aluminum and cars.
And now that Donald Trump is back in the White House, there is even more tension. Last week, Minister of Economic Affairs Robert Habeck said that Germany would not expect economic growth at all in 2025 and accused Trump's tariff policy.
Outside Germany, the better numbers of the eurozone came from smaller countries. Spain and Lithuania grew by 0.6%. Italy rose 0.3%. However, Ireland went to a complete beast regime, jumping in just three months by 3.2%. Such a leap is not new for Ireland – its economy is stacked with large international companies, which makes its numbers more volatile than most other blocks.
France hardly added anything, the quarter was 0.1%. It is still considered to be growth, but it is clear that South and smaller countries wore a block this quarter.
Tariffs hit feelings as the ECB is trying to stay in the course
The European Central Bank has spent most of the last two years to prevent the eurozone economy from being completely out. Earlier this month, the ECB reduced its ability to define the main policy rate to 2,25%, from 4% in mid -2012. Moving had to be more borrowed and spent throughout the area.
Already in March, the ECB announced that it would expect the eurozone GDP to increase by 0.9%in 2025. It was a step below this January forecast. The new projections come in June and the central bank has said that these following numbers are critical to what to do with interest rates next.
But cuts of interest rates are not a silver ball. ECB President Christine Lagarde said the area's disinflation process is “so much on the way that we are coming to an end”, but warned that shocks like US tariffs could again “suppress” growth.
At the Spring Meetings of the International Monetary Fund and the World Bank, officials of both the ECB and other global institutions said one of the greatest threats in Trump's trade policy in Europe.
Currently, the European Union is waiting for its durable tariffs. The block holds the fire until chatting with the US in July succeeds or collapses.
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