The euro zone GDP in the first quarter was 1.2% year-on-year, expectation was 1.1%, and the previous value was 1.2%.

Source: Wall Street Insights

The eurozone economy barely managed to grow in the first quarter, with the economies of Germany and France recording small increases respectively.

Eurostat released the preliminary GDP figure for the eurozone in the first quarter of 2025. The data shows that the preliminary quarter-on-quarter GDP growth rate of the eurozone in the first quarter was 0.4%, higher than the expected 0.2% and the previous value of 0.2%.

Germany's GDP grew by 0.2% quarter-on-quarter in the first quarter, in line with market expectations. The French economy also grew by 0.1%, mainly due to an increase in inventories. Italy's economic growth exceeded expectations, recording a growth of 0.3%.

However, the impact of US trade tariffs has not been fully felt yet. European Central Bank officials have warned that these tariffs will curb economic growth and put pressure on consumer prices.

The German economy barely grows, but there are many hidden concerns

The economies of Germany and France recovered at the beginning of this year. Germany's gross domestic product (GDP) grew by 0.2% quarter-on-quarter in the first quarter, in line with market expectations, barely avoiding a recession.

The statistics office attributed the quarterly growth to "higher household final consumption expenditure and capital formation compared to the previous quarter." However, this cannot hide the long-term weakness of the German economy. In 2023 and 2024, Germany's GDP fluctuated between growth and contraction. The country has been avoiding a technical recession, that is, two consecutive quarters of contraction.

Key industries in Germany, such as the automotive industry, also face fierce competition. Other industries, including housing construction and infrastructure, also face high costs, low investment, and bureaucratic obstacles.

What is more worrying is that Trump's tariff policy has brought uncertainty to Germany, which relies on exports. The United States is Germany's most important trading partner. As part of the European Union, Germany is at risk of facing high tariffs. US tariffs on steel, aluminum, and automobiles also affect Germany.

The German government lowered its economic forecast last week, predicting that the economy will stagnate in 2025. The outgoing Economy Minister Robert Habeck said that Trump's trade policy and its impact on the country were the main factors leading to this adjustment.

Nevertheless, as the new government plans to invest hundreds of millions of dollars in strengthening national defense and infrastructure construction, Germany also sees long-term hope.

France faces dual pressures of politics and trade

The French economy also grew by 0.1%, mainly due to an increase in inventories.

The US trade threats and the inconsistency of policies have led the government to lower the growth forecast for France this year from 0.9% to 0.7%. In the face of a weak economy, the French government has also introduced more expenditure reduction measures to control the budget deficit.

In addition, the political crisis has also disrupted economic growth, leading to a delay in the implementation of France's fiscal measures in 2025. The data for the first quarter shows that investments in enterprises, households, and the public sector have all declined, and exports have also dropped by 0.7%.

Even so, French Finance Minister Eric Lombard said in an interview with Sud Radio on Wednesday that the economy is expected to achieve this year's growth target:

"We are expected to achieve the target of 0.7%. The investment and profit situation is moving in the right direction."

Other European countries also show positive signs: Italy's economic growth exceeded expectations, recording a growth of 0.3%. The GDP growth rates of Spain, Belgium, Austria, Finland, and Lithuania in the first quarter were between 0.1% and 0.6%.

Although Ireland's GDP growth was as high as 3.2%, this figure was affected by its status as a tax base for US multinational corporations.

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