Euro Zone Economy Records Weak Growth in First Quarter as Energy Fears Mount
Euro Zone Economic Performance and Outlook
First Quarter Growth Figures
FRANKFURT, April 30 (Reuters) - The euro zone economy saw faint growth in the first quarter, a preliminary estimate showed on Thursday, offering the first snapshot of activity since the outbreak of the Iran conflict.
Impact of Energy Supply Disruptions
Vulnerability to Oil and Gas Disruptions
The energy-importing euro zone is seen as particularly vulnerable among advanced economies to disruptions in oil, gas and other shipments through the Strait of Hormuz, which began in late February.
GDP Growth Data
Eurostat said gross domestic product in the 21-country currency area rose 0.1% quarter-on-quarter in the three months to March, according to a flash reading, lagging economists' forecasts and the pace recorded in the previous quarter, both at 0.2%.
Business Sentiment and Economic Indicators
Survey Results and Business Conditions
A string of surveys this week points to a further slowdown in activity, with business sentiment weakening, services deteriorating, profits falling and exports still hit by tariffs, while banks signal tighter credit conditions.
Challenges for the European Central Bank
Inflation and Monetary Policy Response
The subdued backdrop complicates the European Central Bank’s response to an emerging, energy-driven rise in inflation.
Interest Rate Expectations
The ECB is widely expected to keep rates unchanged on Thursday, though markets are pricing in three to four increases over the coming year.
(Reporting by Francesco Canepa;Editing by Alexandra Hudson)
