According to Eurostat, the eurozone economy contracted by 0.2% between January and March. “Blame” Ireland due to a sharp downward revision of its GDP data. Ireland’s GDP shrank by 12.1%, not 2% as previously thought, mainly because the transnational sector shrank by 27% over the period.
Transnational corporations based in Ireland often have a significant impact on eurozone data, but the sharp fall in GDP in the first quarter makes it difficult to predict the future development of the region’s economy. This makes it difficult for the European Central Bank to analyze the consequences of the conflict with Iran and adapt monetary policy.
Officials have repeatedly signaled a possible interest rate hike for the first time since 2023 at a meeting scheduled for next week. They say they cannot ignore the energy crisis, which has already pushed up eurozone inflation to 3.2%. However, some experts fear that rising energy prices could undermine the economic recovery that has begun, Bloomberg reported.
Business activity in the region has declined over the past two months, and in May the pace of contraction was the fastest since 2024.
This week, the OECD lowered its forecast for eurozone economic growth this year to 0.8% and noted that “recent data point to a deterioration in sentiment.”
In addition to the Irish data, other statistics have been revised in recent days. France’s GDP declined, while Italy’s figures were better than previously expected.
