The eurozone economy is showing signs of recovery, thanks to an increase in demand in the service sectors. Based on preliminary data from the purchasing managers’ index published on Thursday, the eurozone started to grow in March. The outlook is particularly bright for Spain and Italy, which are among the largest national economies.
Eurozone companies have their strongest growth expectations in March since Russia’s major offensive in Ukraine in February 2022. While some countries like Germany and France anticipate further economic contraction, others like Spain and Italy show moderately supportive economic growth expectations.
According to Päivi Puonti, Forecasting Manager at the Institute for Economic Research, the divide between growth in services and challenges faced by industries continues to impact the eurozone economy. Industries like Germany are particularly affected by a decline in demand for traditional combustion engine cars.
The positive growth in March is a welcome development for the European Central Bank (ECB), as it supports its view that policy rates may start to decrease in the summer. However, there are concerns about potential wage increases leading to inflation.
Despite lingering uncertainty, signs point to a recovery from the worst phase of the economy, supported by data on labor markets and growing confidence in economic growth. The ECB sees this as a positive sign that could lead to further easing of monetary policies aimed at stimulating growth within the region.
Overall, while there are still challenges ahead for individual countries within the eurozone, there is hope that this latest wave of growth will pave the way towards a more stable future for Europe’s economies.
