German Growth

While German growth slowed more than predicted, economists say the nation’s recovery is not at risk. GDP rose 0.3 percent from the fourth quarter, when it was up 0.7 percent. 

The expansion was driven mainly by domestic demand, the country’s statistics office said. Private and government consumption rose and both construction and equipment investment picked up markedly from the previous quarter, while net trade weighed on the economy.

“The German economy managed an impressive comeback at year-end 2014, and this trend of accelerating economic activity remains intact,” said Martina von Terzi, an economist at UniCredit Bank AG in Munich. “More is likely to come in 2015. We expect economic activity to show solid growth in the coming quarters.”

The French economy beat estimates with growth of 0.6 percent, the fastest pace in almost two years, in what may mark the start of a more sustained economic revival after three years of sluggish growth.

The Commission and the International Monetary Fund both see expansion of in excess of 1 percent this year, more than twice the annual pace recorded since President Francois Hollande came to power in 2012.

That would still be below the rate projected for the euro area. The European Commission raised its outlook for the region on May 5, predicting GDP will increase 1.5 percent in 2015.

“The French result exaggerates economic momentum,” said Stefan Kipar, an economist at Bayerische Landesbank in Munich.

“Growth is only supported by strong private and government consumption, which seems to have been primarily supported temporarily by a weaker oil price. Investment and trade once again disappointed.”

Spain, where the government has liberalized the labor market and tackled the legacy of bad debt held by banks since being hit by the crisis, recorded its fastest growth in seven years in the quarter. The economy expanded 0.9 percent and is set to grow almost twice the speed of the euro area this year.