The final data for the first quarter showed a downward revision to the quarterly growth rate to minus 0.1 percent. Following a similarly revised 0.1 percent decline at the end of last year, today's data leave the Eurozone economy in technical recession. Annual growth was unrevised at 1.0 percent, following an unchanged 1.8 percent rate in the previous period.

Quarterly weakness was largely attributable to consumer spending which, having already contracted 1.0 percent in the fourth quarter of 2022, fell a further 0.3 percent. The drop here was compounded by a 1.6 percent slide in government final expenditure, only partially offset by a 0.6 percent increase in gross fixed capital formation. Business inventories subtracted 0.4 percentage points having had a zero impact in the fourth quarter.

Growth would have been more negative but for net foreign demand which added some 0.7 percentage points after a 1.2 percentage point boost last time. Even then, this was solely due to the weakness of imports, which were down 1.3 percent as exports dipped 0.1 percent.

Regionally, the headline revision was largely due to Germany where quarterly growth was revised down to minus 0.3 percent. Amongst the other three larger economies, Italy (0.6 percent) and Spain (0.5 percent) still show solid quarterly gains and France (0.2 percent) a more modest advance. Apart from Germany, Estonia, Ireland and Lithuania were all also in recession.

The latest data confirm a very subdued picture of domestic demand across the region as a whole. This may have few implications for how the ECB votes next week, but it should bolster the likelihood of a more rapid deceleration in underlying inflation than the central bank currently anticipates. As such, the peak to key rates may now be somewhat nearer. To this end, the Eurozone ECDI (minus 31) and ECDI-P (minus 14) remain well in negative surprise territory, indicating that economic activity in general continues to fall someway short of what the forecasters predicted.

No revision is expected to the flash data leaving quarterly growth at 0.1 and the annual rate at 1.3 percent. However, a sizeable negative revision to Germany makes for downside risk.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy and is usually released early in the third month after the reference period. Following two provisional (flash) estimates containing only limited information, this report provides the first full look at the national accounts for the region.

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 a treasure-trove of 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, and price (inflation) indexes 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 anemic 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 typically lead to increased demand for a local currency. However, inflationary pressures can put downside pressure on a currency regardless of growth. For example, if inflation remains above the ECB’s near-2 percent target for long enough, worries about the impact of lost competitiveness on the merchandise trade balance could prompt investors to switch to an alternative currency.