FX.co ★ Eurozone Economy Contracts 0.2% in Q1 2026

The Eurozone economy contracted by 0.2% in the first quarter of 2026, according to final data from EUROSTAT, a downward revision from the initially reported 0.1% growth. This is the region’s first quarterly decline since Q4 2022 and the steepest drop since mid-2020. The revision was driven primarily by a sharp downgrade to Ireland’s GDP, which fell by 12.1% in Q1, alongside a modest contraction in France (-0.1%).

Among the major Eurozone economies, Spain posted the strongest performance with 0.6% growth, while Germany and Italy each expanded by 0.3%, and the Netherlands grew by 0.1%.

The overall weakness reflects continued pressure from constrained energy supplies, rising inflation linked to the conflict in the Middle East, and the European Central Bank’s preparations for further monetary tightening.

On the expenditure side, net trade and changes in inventories reduced GDP growth by 0.3 and 0.1 percentage points, respectively. Fixed investment declined by 0.3%, while household consumption and government spending slowed, rising by just 0.2% and 0.5%.