The eurozone grew at a measly 0.2% pace in Q1, which missed expectations for 0.4% growth.
“The eurozone as a whole appears to be in the midst of a very gradual recovery but it is all about one economy,” said Pantheon Macroeconomics’ Claus Vistesen. “Germany is accelerating and performing strongly while the rest of the zone is stalling or even falling further behind.”
Despite the shared currency, each of the countries in the eurozone have a unique story. Here are highlights from some of the GDP reports we got in the past few hours:
France Halts. GDP growth was 0.0%, missing expectations for 0.1% growth. “The household component was especially weak, with both headline expenditures and household investment reporting significant declines,” noted Pantheon Macroeconomics’ Ian Shepherdson. “Gross fixed capital formation also fell a notable 0.9% from the last quarter of 2013, but preliminary figures are usually substantially revised. Net trade contributed a negative 0.2% which is bad for France but good for its main trading partners in the eurozone.”
Germany Grows. GDP grew at a healthy 0.8% annualized pace, beating expectations for 0.7% growth. “This is a very strong report which solidifies the idea of Germany as the eurozone’s growth engine,” said Pantheon’s Shepherdson. “We don’t get numerical details for the sub-components from the German statistical office in this first report, but all components of domestic demand are reported to have risen strongly.”
Italy Contracts. GDP unexpectedly declined 0.1% annualized versus expectations for 0.2% growth. That’s just not good.
Portugal Tanks. GDP plunged 0.7% annualized versus expectations for 0.1% growth. That’s worse.
The fact that Germany could surprise to the upside while the rest of Europe disappoints is troubling.
“This is worrying because the assumption that a strong Germany would act as driving force for its weaker neighbours now seems severely challenged,” said Vistesen. “Indeed, it would even appear that Germany’s economy, with its large external surplus, to some extent is preventing an even recovery across the eurozone as a whole.”
Overnight, we got Q1 GDP reports from other parts of the world too.
We learned Japan’s economy exploded, with GDP growing at a 5.9% annualized pace, crushing expectations for 4.2%. The key driver of grow appears to be the April consumption tax hike, a Q2 phenomenon that encouraged consumers to pull forward their purchases to Q1. This caused domestic demand to add 1.7 percentage points to quarterly growth. “Looking ahead, we anticipate that the strong growth in Q1 will be partially offset by negative growth in Q2 due to the subsequent decline in domestic demand after the consumption tax hike,” said Societe Generale’s Kiyoko Katahira.
Last month, we learned GDP growth decelerated to a disappointing 0.1% pace in the U.S. Meanwhile, everyone agrees the Chinese economic growth engine in slowing to just over 7%.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.