Investing.com -- The euro-zone’s economy demonstrated a stronger start to the year than anticipated, with a Gross Domestic Product (GDP) growth of 0.4% quarter-on-quarter in the first quarter of 2025, according to data published on Wednesday.
This figure surpassed the consensus forecast of 0.2%, as well as Capital Economics’ prediction of 0.3%, marking an acceleration from the 0.2% expansion seen in the last quarter of the previous year.
Ireland contributed significantly to this growth, with its GDP surging by 3.2% quarter-on-quarter. However, even with Ireland’s volatile economic performance set aside, the euro-zone still saw a commendable increase of 0.3%.
Spain led the major economies with a growth of 0.6%, while Italy and Germany both exceeded expectations with expansions of 0.3% and 0.2%, respectively. Germany’s growth was particularly notable, reversing a contraction of 0.2% in the previous quarter.
France’s economy expanded by 0.1%, aligning with forecasts.
Despite the positive start, Capital Economics has cautioned that the region’s economic momentum is likely to decelerate in the coming six months.
The recently introduced U.S. tariffs are expected to impact economic activity negatively, potentially reducing GDP growth by approximately 0.2%. Moreover, the anticipated benefits from Germany’s fiscal stimulus are projected to materialize only towards the end of the year.
The outlook for the near term is less optimistic, with predictions of a sharp slowdown in growth. The euro-zone’s GDP is forecasted to stall in the second quarter and register a minimal growth of just 0.1% in the third quarter.
This slowdown is partly attributed to the adverse effects of the U.S. tariffs and a recent power outage in Spain, which may deduct up to 0.4% from the nation’s GDP growth in the second quarter.