2022.05.1712:23:00UTC+00Eurozone GDP Logs Steady Growth In Q1

Euro area economy logged a steady growth in the first quarter, which was slightly faster than the preliminary estimate, latest data from Eurostat showed Tuesday.

Gross domestic product expanded 0.3 percent sequentially, the same rate as seen in the fourth quarter of 2021. The rate was revised up from the initial estimate of 0.2 percent.

The currency bloc grew 5.1 percent from last year, which was slightly faster than the 5.0 percent expansion estimated initially. GDP had expanded 4.7 percent in the fourth quarter.

The EU27 GDP advanced 0.4 percent from the previous quarter, taking the annual growth to 5.2 percent. Both rates matched the preliminary estimate published on April 29.

Further, data showed that the number of employed persons in the eurozone increased 0.5 percent from the fourth quarter, when employment grew 0.4 percent. Year-on-year, growth in employment improved to 2.6 percent from 2.1 percent.

The labor market is likely to remain a relative bright spot but the expected slowdown in activity this year will act as a headwind, Capital Economics' economist Jessica Hinds said.

The economist assessed that wage growth is set to accelerate over the coming quarters, keeping the pressure on the European Central Bank to normalize its policy stance.

According to the Spring Forecast, published by the EU on Monday, the eurozone economy will grow 2.7 percent in 2022 and 2.3 percent next year.

But these reflect downward revisions for both 2022 and 2023 from 4.0 percent and 2.7 percent, respectively as Russia's invasion of Ukraine has posed new challenges. By exerting further upward pressures on commodity prices, causing renewed supply disruptions and increasing uncertainty, the war is exacerbating pre-existing headwinds to growth, the the EU said.

Eurozone inflation outlook for this year was lifted sharply to 6.1 percent from 3.5 percent, and that for next year to 2.7 percent from 1.7 percent.