21:45 - 5.06.2026

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June 5, Fineko/abc.az. The Eurozone economy contracted in the first quarter of this year, heavily impacted by a sharp economic downturn in Ireland.

ABC.AZ reports that this was revealed in a report by the European Union's statistical office, Eurostat.

According to the data, Eurozone GDP fell by 0.2% between January and March, reversing previous consensus estimates that predicted a 0.1% expansion. The primary driver behind this downward revision was a drastic shift in Ireland’s GDP data, which plummeted to a 12.1% contraction from an initial reading of a 2% growth.

Rate Hike Signals and Energy Shock: Officials emphasized that the ongoing energy shock—which has already driven Eurozone inflation up to 3.2%—can no longer be ignored. Consequently, policymakers signaled that the central bank could implement its first interest rate hike since 2023 at next week's meeting. However, some officials worry that surging oil and gas prices could derail the nascent economic recovery.

Divergent Economic Indicators and OECD Forecast:

• Business Activity: Commercial activity in the bloc has been declining for the past two months, with May's contraction marking the fastest pace since 2024.

• OECD Forecast: Earlier this week, the OECD projected that the Eurozone economy will grow by just 0.8% this year, noting that recent indicators point to a severe erosion of consumer and business confidence.

• France and Italy: Recent data revisions across larger economies showed mixed results; while France's GDP figures were revised downward, Italy's performance came in better than previously reported.

Ireland's Paradoxical Performance: Although Ireland's multinational-dominated sector contracted by 27% during the quarter, core domestic metrics told a different story. Modified domestic demand—a more accurate indicator of the local economy—managed to grow by 0.6%, driven by resilient personal spending.