The euro zone economy grew by 0.3% in the first quarter of the year, signaling a slow recovery after six consecutive quarters of stagnant or negative growth. This is good news for many economists who had predicted that a recession was imminent. Despite this positive development, it’s worth noting that the previous quarter showed a confirmed growth rate of minus 0.1%, confirming that the bloc was in a recession as many had predicted.
In terms of economic performance among the largest euro zone countries, Spain was the strongest performer in the first quarter with a growth rate of 0.7%. Germany, France, and Italy were either at or just below the euro zone average. Employment also saw growth of 0.3% in the first quarter, indicating that firms were hoarding labor in anticipation of a rebound in growth. This suggests that the labor market continued to tighten during this period.
Despite efforts by the European Central Bank to raise interest rates to curb inflation and slow growth, firms in the euro zone held on to workers unlike previous recessionary periods. This retention of workers may be due to their experience during the pandemic, where they faced challenges in rehiring workers and the services sector struggled due to labor shortages.
