Gross domestic product in the 16 euro nations rose 0.2 percent from the fourth quarter, when it remained unchanged, the European Union’s statistics office in Luxembourg said today.
The euro-area economy may gather strength after European leaders earlier this week pledged a rescue package worth almost $1 trillion to counter a spreading Greek debt crisis and restore confidence. Concern about governments’ ability to tackle their deficits has pushed down the euro 11 percent against the dollar this year, helping bolster the region’s export-led recovery.
From the year-earlier quarter, euro-area GDP rose 0.5 percent after declining 2.2 percent in the fourth quarter, report showed. In Germany, Europe’s largest economy, GDP rose 0.2 percent in the first quarter from the previous three months. French GDP rose 0.1 percent from the fourth quarter and the Italian economy expanded 0.5 percent.
By contrast, the Greek economy contracted 0.8 percent from the fourth quarter, when it also shrank 0.8 percent, today’s report showed. In Spain, the economy expanded 0.1 percent in the first quarter and Portugal grew 1 percent. Ireland hasn’t released GDP data for the first quarter.
With the euro’s decline making European goods more competitive, companies have relied on exports to bolster earnings as households hold back spending. Europe’s services and manufacturing industries expanded at the fastest pace in almost three years in April and economic confidence improved. European industrial production increased 6.9 percent in March from a year earlier, today’s report showed.
European builders may help bolster an expansion in the current quarter after unusually cold temperatures in the previous three months hurt construction output. European Central Bank President Jean-Claude Trichet said on May 6 that while some recent economic indicators were quite encouraging,” there’s reason to remain prudent and cautious.”