The euro area continued its steady, if modest, upward trajectory in early 2025 as GDP rose by 0.4 percent in the euro area in the first quarter, maintaining the slight recovery seen at the end of 2024. This was 0.2 percent more than the consensus forecast for the period. On an annual basis, the euro area recorded higher growth at 1.2 percent, unchanged from the previous quarter and 0.2 percentage points higher than the consensus forecast for the period.

This suggests a stabilising economic environment, supported by resilient domestic demand and improving investment conditions. Although the pace remains moderate, the consistency in year-over-year figures reflects underlying economic resilience amid broader global uncertainties.

Within the region's quarterly advance, France expanded 0.1 percent after minus 0.1 percent. Spain grew 0.6 percent after 0.7 percent. Germany grew 0.2 percent after minus 0.2 percent, while Italy also rose 0.3 percent after 0.2 percent. This latest update takes the euro area RPI to minus 4 and the RPI-P to minus 5, meaning that economic activities are within the consensus expectations of the euro area economy.

The consensus sees GDP up 0.2 percent on the quarter and 1.0 percent on year.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. There are two preliminary estimates which are based on only partial data. The first is the preliminary flash, introduced in April 2016 and limited to just quarterly and annual growth statistics for the region as a whole. This is issued close to the end of the month immediately after the reference period. The second flash report, released about two weeks later, expands on the first to include growth figures for most member states but still provides no information on the GDP expenditure components.

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.