By Paul Hannon
Ireland's economy grew for the first time in more than a year during the three months through March, a boost to hopes that the eurozone has emerged from a shallow recession.
Ireland's statistics agency on Monday said the country's gross domestic product was 1.1% higher than in the final three months of 2023, marking the first increase in the output of goods and services since the last quarter of 2022.
That revival was largely driven by a stabilization of the country's large pharmaceuticals industry. Output of drugs and medical equipment soared during the Covid-19 pandemic, but fell back sharply last year as global demand cooled.
The eurozone economy contracted slightly in both the third and fourth quarters of last year, and met a definition of recession commonly used in Europe, but not in the U.S.
While that was largely driven by the drag from high energy and food prices on household spending on other goods and services, and rising interest rates, Ireland's contraction was an additional headwind.
Ireland's rebound therefore makes it more likely that the eurozone as a whole returned to growth in the first three months of the year. Economists surveyed by The Wall Street Journal expected figures to be released on Tuesday to show that the eurozone's GDP rose by 0.1% from the previous quarter.
"The direction is towards at least some recovery on the back of signs of acceleration in services, while manufacturing and construction remained in the doldrums," economists at NatWest Markets wrote in a note to clients.
The Irish economy is also expected to contribute to a wider eurozone pickup in this and coming quarters. The Central Bank of Ireland last month forecast that the country's GDP would expand by 2.8% this year, an expansion that would likely outpace most of the rest of the currency area.
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
04-29-24 0627ET
