Euro area Q1 growth data so far today tells the story of ‘bend but don’t break’

Eurozone growth in Q1 may not be stellar but it isn’t as bad as feared for now


There were plenty of fears we would see the dismal manufacturing sector in Germany prove to be a drag on overall Eurozone growth in Q1 2019 but so far, there doesn’t seem to be too much signs of that based on preliminary readings.

Overall growth isn’t spectacular but it certainly isn’t recession-like or slowing down to the point where we’re seeing a standstill in the economy. The likes of Italy and Germany are likely to be disappointing areas that ought to be paid attention to in the coming quarters but there are some green shoots such as Spain to help cushion the blow at least.

The phrase ‘bend but don’t break’ very much fits the bill here in my view but it doesn’t mean that we’ll see an imminent rebound in the coming quarters. It’s very much step by step for the euro area economy so let’s see if China’s decent Q1 economic performance will have a lagged spillover effect on the region over the next few months.

For now, markets are feeling more confident and we’re seeing the key gauge of long-term Eurozone inflation expectations rise to 1.41% – a five-week high – from just 1.34% yesterday. That is part of the reason helping to boost the euro against the dollar above 1.1200.

Draghi ECB

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