Euro area economy grew by 0.3% in Q1, June rate cuts still expected, despite core inflation uptick.
30 April 2024
After Spanish, French, Italian and German Gross Domestic Product (GDP) quarterly prints that all exceeded expectations this morning, it was a nailed-on certainty that the flash estimate for Eurozone growth in the first quarter was going to show that the region has cast off its recessionary chains. That is indeed what has occurred as GDP for the region expanded 0.3% over the quarter, better than the estimate of 0.1% growth.
On the flip side inflationary prints across individual European countries showed continued stubbornness in the pace of descent from last year’s highs as energy price support policies are pulled back. Core inflation (which excludes food and energy) fell from 2.9% year-on-year in March to 2.7% in April, which was a bit higher than the 2.6% expected, and markets still think June is the month for the first European Central Bank (ECB) cut. As long as the next few months’ inflation prints gravitate lower then this is still possible but it would certainly help their case if the pace of descent was a bit quicker.
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The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is not an indicator for the current or future development.