France is in turmoil over the government’s economic reforms and analysts fear that a credit bubble is about to burst in Turkey.
The eurozone economy last quarter defied trade conflicts, a slowdown in China and uncertainty over Brexit to register its best growth since early last year, according to official statistics released Tuesday.
Only a few months ago it looked as if Europe could slide into recession. But the 19 countries that belong to the eurozone monetary union grew 0.4% in the first three months of 2019 compared with the last three months of 2018, the European Union statistics agency estimated. That was the best growth since the second quarter of last year.
Italy emerged from a half-year recession with growth of 0.2% over the previous quarter, easing anxiety that the highly indebted country could spark a new financial crisis.
While economists warned that the overall growth rate might not last, the resilience of the eurozone economy was remarkable considering all of the forces conspiring to undermine it.
These include a trade war with the United States that has shaken European business managers; slower growth in China, an important market for European goods; and political chaos in Britain as the country tries to navigate its way out of the European Union.
Still, France is in turmoil over the government’s economic reforms and analysts fear that a credit bubble is about to burst in Turkey, an important trading partner that borders the eurozone.
Surveys show that business managers continue to worry about all those factors. But for the moment European consumers are unfazed and their spending is propping up growth.
The eurozone also benefited from a warm spring that allowed construction firms to do more work, as well as Spain’s continued rebound from crisis several years ago. Growth in Spain was 0.7% during the quarter.
In addition, President Donald Trump’s trade war has not hurt European commerce as much as political leaders feared and Italy even recorded an increase in exports.
“Today’s data should noticeably reduce fears of recession in the eurozone,” Christoph Weil, an economist at Commerzbank, said in a note to clients. “However, it remains to be seen whether the period of weak growth recorded in the second half of last year has actually been overcome.”