Eurozone's GDP increased by 0.4% in the first quarter, exceeding expectations, leading to a rise in European stocks; U.S. economy shrinks unexpectedly by 0.3%.
In the first quarter of 2025, the Eurozone's GDP increased by 0.4% from the previous quarter, exceeding expectations and boosting European stock markets. The U.S. GDP contracted by an annualized 0.3%, marking the first decline in three years, due to an increase in imports and a decrease in government spending. The Eurozone economy continued to grow with support from multiple countries, while the U.S. economy was under pressure due to a widening trade deficit and sluggish job growth.
Key Updates
04/30 18:00
Eurozone's GDP increased by 0.4% in the first quarter, exceeding expectations, leading to a rise in European stocks; U.S. economy shrinks unexpectedly by 0.3%.
In the first quarter of 2025, the Eurozone's GDP increased by 0.4% from the previous quarter, exceeding expectations and boosting European stock markets. The U.S. GDP contracted by an annualized 0.3%, marking the first decline in three years, due to an increase in imports and a decrease in government spending. The Eurozone economy continued to grow with support from multiple countries, while the U.S. economy was under pressure due to a widening trade deficit and sluggish job growth.
Eurozone Economic Growth Driven by Multiple Countries
According to data from the EU statistics bureau, most of the 20 member countries in the Eurozone achieved positive growth in the first quarter. Ireland stood out the most with a GDP increase of 3.2% quarter-on-quarter; Spain and Lithuania each grew by 0.6%. Germany, the largest economy in the Eurozone, successfully emerged from the previous quarter's contraction with a 0.2% quarterly increase, meeting market expectations. France experienced a modest growth of 0.1%, just below the expected 0.2%.
Overall, the Eurozone's GDP annual growth rate for the first quarter was 1.2%, unchanged from the previous quarter and above the market estimate of 1%. The EU's overall economy grew by 0.3% quarter-on-quarter, slightly below the previous quarter's 0.4%.
Major European Stock Markets Close Higher
Encouraged by stronger-than-expected Eurozone economic data, major European stock markets generally closed higher on April 30. The London FTSE 100 index rose by 31.39 points, or 0.37%, closing at 8,494.85 points. The Frankfurt DAX index increased by 71.15 points, or 0.32%, closing at 22,496.98 points. The Paris CAC 40 index rose by 38.00 points, or 0.50%, closing at 7,593.87 points.
Additionally, the pan-European Stoxx 600 index also rose by 0.46%. The market widely believes that the strong performance of the Eurozone economy bolsters corporate profits, although some bank stocks are under pressure due to uncertain trade tariff prospects.
U.S. Economy Experiences First Quarterly Contraction in Three Years
In sharp contrast to Europe, the U.S. economy unexpectedly contracted in the first quarter of 2025. According to data released by the U.S. Department of Commerce, the GDP annualized quarterly rate fell by 0.3%, marking the first negative growth since the first quarter of 2022. This figure is far below the market expectation of 0.4% growth and significantly lower than the previous quarter's 2.4% growth.
According to official explanations, the GDP decline was mainly due to a surge in imports and a reduction in government spending. Companies preemptively imported a large volume of goods to avoid upcoming tariffs, leading to an expanded trade deficit. Additionally, a decrease in government spending also dragged down the overall economy.
Other U.S. economic data released on the same day also showed signs of weakness. The ADP employment report indicated that U.S. private companies added only 62,000 jobs in April, the lowest since July 2024, and far below the market expectation of 108,000.
Divergent Economic Trends in Europe and the U.S.
The economic performance of the Eurozone and the U.S. in the first quarter of 2025 showed a clear divergence. Driven by economic recovery in multiple countries, the Eurozone achieved a 0.4% quarterly increase, showing resilience in a high-interest rate and inflationary environment. In contrast, the U.S. economy contracted due to a surge in imports and reduced government spending, marking the first occurrence of this kind in three years.
While European stock markets generally closed higher, buoyed by economic data, the U.S. market was under pressure due to GDP data falling short of expectations. Market participants are closely monitoring subsequent economic data and policy directions to assess the recovery progress of major global economies.
