Eurozone Economy Weaker Than Expected in Early 2025

The economic performance of the Eurozone at the beginning of the year has come in below earlier expectations, according to revised data released by Eurostat. While growth was still recorded, it fell short of initial estimates, and significant differences emerged between individual member states.

In the first quarter of the year, the economy of the 20 countries using the euro expanded by 0.3% compared to the previous quarter. This figure is slightly below the preliminary estimate of 0.4% released earlier. Analysts had broadly expected the initial forecast to be confirmed.

This modest growth follows a 0.2% increase in the fourth quarter of the previous year, suggesting that the economic momentum in the euro area remains subdued.

Wide Disparities Across Member States

The updated figures also highlight notable differences between Eurozone countries. Spain continued to post solid growth, with its gross domestic product (GDP) rising by 0.6% quarter-over-quarter. Meanwhile, the two largest economies in the currency bloc, Germany and France, saw only minimal improvements.

Ireland stood out with the strongest performance, reporting an impressive 3.2% growth in GDP. However, Eurostat noted that due to the high level of foreign-owned production in Ireland, its economic data tends to show greater volatility compared to other member states.

Industrial Output Surges in March

Despite the slower-than-expected GDP growth, the industrial sector delivered a strong performance in March. Industrial production across the Eurozone rose by 2.6% from the previous month, significantly exceeding economists’ average forecast of a 2.0% increase. This came on top of a 1.1% rise in February.

Ireland once again led the pack with a massive 14.6% jump in industrial output. Malta and Finland also posted strong monthly gains of 4.4% and 3.5%, respectively. However, Eurostat cautioned that Ireland’s industrial output figures are subject to sharp monthly swings due to the structure of its economy, which relies heavily on multinational corporations.

On the other end of the spectrum, Luxembourg and Greece recorded the steepest declines in production, with drops of 6.3% and 4.6%, respectively.

Year-over-year, industrial production in the Eurozone climbed by 3.6%, outperforming expectations of a 2.5% increase.

Outlook Remains Uncertain

The latest figures paint a mixed picture for the Eurozone’s economic health. While the manufacturing sector shows signs of resilience, overall growth remains fragile, and the disparities among member states underline the uneven pace of recovery across the bloc.

Economists are now watching closely to see if the industrial uptick in March signals a broader rebound or if it’s just a temporary boost amid ongoing economic uncertainties.