Eurozone Recovers To Pre-Recession Level

The eurozone economy has finally recovered all the ground lost since the 2008 downturn after growth accelerated in the first quarter of 2016.

An official first estimate from statistical body Eurostat showed the 19-nation single currency bloc saw better-than-expected gross domestic product (GDP) growth of 0.6%, double the rate of 0.3% in the fourth quarter of 2015.

It (Other OTC: ITGL - news) meant the size of the economy was now 0.4% bigger than the first quarter of 2008, just before the global financial crisis.

Unemployment figures for the bloc for March also showed an improvement. However, inflation slipped back below zero to -0.2% in April.

Negative inflation is a worry for policy makers because of fears that a spiral of falling prices could deter spending and investment.

The eurozone has gone into and out of recession over the last eight years and the pace of its return to pre-crisis levels has lagged behind the UK, which did so in 2013.

The European Central Bank has been pouring tens of billions of euros in stimulus into the economy every month through a money-printing quantitative easing programme, while interest rates have also been slashed in a bid to revive growth.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The ECB will certainly be encouraged by the marked first quarter pick-up in eurozone GDP growth, and will no doubt argue that it shows its monetary policy is working."

He said the improvement reinforced the likelihood that the central bank would remain in "wait and see" mode over more stimulus for the next few months.

The eurozone's first-quarter growth was stronger than that seen in the UK, which this week reported a slowdown in the pace of expansion to 0.4%, compared to 0.6% in the fourth quarter of 2015.

Growth in the US has also been slowing , according to figures released on Thursday.