The economy was disappointingly weak at the start of the year. Following a steeper revised 0.5 percent quarterly contraction in the previous period, GDP was provisionally only flat in the January-March period. This was just short of the market consensus and means that total output, while just about avoiding a technical recession, has not expanded since the third quarter of last year. Annual workday adjusted growth turned negative at minus 0.1 percent, down from 0.8 percent last time, while the unadjusted yearly change was stable at 0.2 percent.

As usual, no GDP expenditure components were released in the flash estimate but the FSO did indicate that the quarterly change was depressed by another decline in household consumption and lower government spending. Offsetting positive effects came from stronger investment and exports. More detailed results will be available on 25 May.

Taken together with the data already released from France (0.2 percent), Italy (0.5 percent) and Spain (also 0.5 percent) today's German update points to quarterly Eurozone GDP growth of about 0.3 percent. This would be on the strong side of expectations and increase the likelihood of further ECB tightening next week. For Germany, the latest report puts the ECDI at minus 7 and the ECDI-P at exactly zero. In general, economic activity is evolving much as expected.

The flash estimate for first-quarter GDP is quarter-over-quarter growth of only 0.1 percent for year-over-year growth of only 0.3 percent.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The provisional or flash estimate is normally released in the second week of the second month after the reference quarter. This is based on only limited data and provides just quarterly and annual growth rates and a limited qualitative guide to how the major output sectors performed.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anaemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.