In its latest release, Eurostat has significantly upgraded its estimate of GDP growth, with the EU and the Euro-zone quarter-on-quarter trend now both showing +0.6% (up from +0.3% in both areas). However, this change is largely down to a revision for Ireland which is driven by multi-national HQ operations rather than the real economy.
Compared to a year earlier (Q1-2024), seasonally adjusted GDP has grown by +1.6% in the EU and +1.5% in the Euro-zone – the revisions here are less dramatic having been +1.4% and +1.2% respectively in the preliminary estimate published three weeks ago.
Among the main components of the economy, gross fixed capital formation (broadly net investment) increased quarter-on-quarter by +1.8% in both the EU and the euro-zone; this is a substantial improvement on Q4-2024 where the growth was +0.6% and +0.7% respectively.
The Eurostat publication does not indicate the impact of the Irish data on the component level of GDP, but the overall changes illustrate the distortion it gives to the overall figures. For Q1-2025, Irish GDP was +9.7% higher than in the previous quarter and +21.1% above the level of a year earlier.
Ignoring that extreme trend, the strongest quarter-on-quarter growth at the start of this year was in Malta (+2.1%) and Cyprus (+1.3%) – it is inevitable that in most circumstances, the smaller economies will see sharper swings. Four countries – Finland, Greece, Latvia and Romania – reported no change in GDP compared to Q4-2024.
On the downside, 7 of the EU Members states saw a contraction in GDP for the 1st quarter – these were Luxembourg (-1.0%), Slovenia (-0.8%), Denmark, Portugal (both -0.5%), Estonia (-0.3%), Hungary and Sweden (both -0.2%). However, all of these had growth in the previous quarter (Q4-2024), so are, not yet at least, in a recession. The two countries whose economies contracted at the end of last year – France and Germany – both recorded positive figures at the start of 2025 and so also avoided being in recession.
You can get the Eurostat figures from their website at https://ec.europa.eu/eurostat/web/main/news/euro-indicators (06 June) or request it from MTA.