The euro area economy showed modest but steady momentum in early 2025, with GDP growing by 0.3 percent in the first quarterup slightly from 0.2 percent in the final quarter of 2024. This incremental rise suggests a cautiously improving economic landscape, buoyed by stabilising inflation, resilient domestic demand, and recovering industrial output across several member states.

On an annual basis, GDP rose by 1.2 percent in the first quarter of 2025, matching the growth rate seen in the previous quarter. This consistency reflects a level of underlying stability despite ongoing geopolitical and energy market pressures. While the pace of expansion remains subdued compared to pre-pandemic levels, the euro area appears to be navigating external headwinds with relative confidence.

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.

The data points to a eurozone that is gradually regaining its footing, with the foundation laid for a more sustained recovery as investment and consumer activity improve. The challenge moving forward will be maintaining this upward trend amid global uncertainties and internal divergences in growth performance among member states. The latest update takes the RPI to 25 and the RPI-P to 15, meaning that economic activities continue to remain well ahead of the expectations in the eurozone.

GDP is expected unrevised with a quarterly gain of 0.4 percent in Q1 and an increase of 1.2 percent on the 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.