Economic growth in the euro zone overtook the U.S. in the first quarter, posting its fastest rate in almost two years, official data released Wednesday show.
Gross domestic product (GDP) growth in the 19-member euro area rose 0.4 percent quarter-on-quarter and 1 percent year-on-year. That compares with analyst expectations for a 0.5 percent quarterly rise and 1.1 percent annual increase as slower growth from Germany weighed.
Still, the quarterly expansion was the strongest since the second quarter of 2013, while the annual rate was higher than the 0.2 percent annual rate notched up by the U.S. economy in the first quarter.
“When the US economy practically stalls in the first quarter and Japan’s is still struggling to pull out of recession, quarterly growth of 0.4 percent in the ailing euro zone looks positively sprightly,” Nicholas Spiro, managing director at Spiro Sovereign Strategy, said in a note.
“For the first time since the euro zone crisis escalated dramatically in the middle of 2011, Europe’s single currency area is showing signs of meaningful growth. The bloc’s four largest economies are at least expanding which is quite a feat considering where the euro zone stood at the end of last year amid fears of a Japanese-style deflationary spiral,” he added.
Greece in recession
A near 18 percent fall in the euro over the past year, a halving in oil prices between June and January and a massive 1 trillion euro stimulus package from the European Central Bank (ECB) have boosted euro zone economies.
“The fact that we are seeing some momentum is encouraging but by no means does it mean we are going the see the QE [quantitative easing] program ease soon,” said George Goncalves, managing director and head of U.S. rates strategy at Nomura Securities, speaking to CNBC after the data release.
In fact, separate readings of GDP in the euro area published on Wednesday revealed a mixed picture.
Greece, which is desperately trying to avert a bankruptcy, slipped back into a recession in the first quarter. Its economy shrank 0.2 percent, following a 0.4 percent contraction in the fourth quarter data showed.
Germany, Europe’s biggest economy, grew 0.3 percent in the first quarter from the previous one, down from a 0.7 percent rate in the final quarter of last year.
The disappointing numbers from Germany came as imports rose more sharply than exports, and weighing on growth in the first quarter.