Euro area: stronger growth than expected in Q1 2025

Euro area GDP growth exceeded e xpectation s in Q1 , rising by +0.4% Q/Q from +0.2% in Q4 24 ( Consensus at +0.2%, Natixis: +0. 3 %). GDP growth was broadly in line for the big 4 , and part of this over-performance was linked to Ireland (+3.2% Q/Q ) which recorded the highest increase in growth among EU countries . Looking into detail s : German GDP rose by 0.2% Q/Q ( after a decline of -0.2% in Q4 ) due to an increase in private consumption and investment. French GDP slightly increased by 0.1% Q / Q after -0.1% in Q4 . Italian GDP grew by 0.3% Q/Q after 0.2% in Q4, with domestic demand being the main contributor . Spanish GDP slightly decelerated in Q1 to 0.6% after 0 . 7% in Q4 , with both external and internal demand contributing positively to growth. For Q2, uncertainties remain high after the “liberation day” followed by the “90-days pause” on reciprocal tariffs. Recent surveys suggest that businesses are not impacted yet by the trade war due to front running effects from US importers. For the next quarters, uncertainties regarding tariffs and slowdown of exports to the US would impact net trade, household consumption and business investments. Hence, considering recent surveys, we do expect euro area GDP growth at 0.2% Q/Q in Q2 2025.