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Eurozone economy contracted below expectations in first quarter

The euro zone gross domestic product contracted 1.3% year-on-year in the first quarter of the year, compared to 1.8% drop in the last quarter of 2020, when the bloc’s economy was in the second technical recession since the start of coronavirus pandemic.

The Q1 figure fell below forecasts for 1.8% contraction, with milder than expected dip suggesting that the economy is returning to the recovery track.

The biggest countries of the zone sharing the euro showed different results in the first quarter, with Germany’ figures being slightly weaker, France dipped against an earlier estimate of growth, Italy grew marginally against expected dip, while smaller member countries were more positive in the January-March 2021 period.

Rising inventories added 0.7% to the overall quarterly figure, investment and trade each contributed by 0.1%, while government spending was neutral and falling household consumption, hit by the latest lockdowns across the Europe, subtracted 1.2% from the quarterly result.