Economic expansion in the euro zone began 2022 on a weak footing — underscoring the damage from soaring energy costs and worsening supply snarls following Russia’s invasion of Ukraine.
Output increased 0.2% from the previous quarter in the three months through March — matching the median estimate in a Bloomberg survey.
The figure reflects a contraction in Italy, stagnation in France and weaker-than-expected growth in Spain. Germany, the region’s largest economy, narrowly avoided a recession.
Whether the euro-area can continue to grow will depend largely on what happens in Asia and Ukraine. Strict lockdowns in the former and Russia’s invasion of the latter are choking already strained supply chains, damping confidence and pushing inflation from one record to another.
In April, consumer prices rose 7.5% from a year ago, and while the European Central Bank predicts a slowdown in the second half, the rate probably won’t fall below 4% this year. Officials are preparing to end bond-buying early in the third quarter, and some including Vice President Luis de Guindos have signaled interest rates could rise as early as July.