The euro zone economy experienced a growth of 0.1% in the first quarter of the year, according to preliminary figures released on Friday. This comes as Germany's Gross Domestic Product (GDP) flatlined during the same period, falling short of economists' forecast for quarterly growth of 0.2%.
National data published on Friday revealed that the German economy stagnated in its first quarter compared with the previous three-month period. These figures will be closely monitored ahead of European Central Bank's meeting scheduled for May 4.
The central bank is seeking to address headline inflation at a staggering rate of 6.9%, along with core inflation at an all-time high of 5.7%. In contrast, economic output within the European Union increased by 0.3% during Q1 compared to the last quarter.
In major economies such as France and Germany, investment and foreign trade have been expanding throughout these initial months; however, persistent inflation remains a significant concern across Europe.
European governments are expected to step in with subsidies aimed at supporting businesses and consumers who face rising electricity and food prices due to this ongoing issue.
As part of their efforts against soaring inflation rates, it is anticipated that next month will see another interest rate hike from the European Central Bank - effectively raising business costs further.
Signs of improvement were seen elsewhere within EU countries like Italy, Belgium, Spain – where growth picked up – and especially Portugal which saw its economy expand by an impressive rate of 1.6%.
Economist Dr.Lucia Moretti stated: "While it is encouraging to see some recovery across Europe after recent economic struggles brought about by global events such as pandemic-related lockdowns or supply chain disruptions due to geopolitical situations like Russia-Ukraine conflict– we must remain cautious going forward."
She added: "Governments and central banks alike will need to carefully balance their efforts in promoting growth while simultaneously addressing the challenges of rampant inflation."