2018.05.0222:36:00UTC+00Eurozone Economy Slowed in the 1st Quarter

The eurozone economy slowed in the first three months of 2018, heightening fears the currency union's post-crisis recovery is petering out.

Data from Eurostat showed a sharp slowing in economic activity. Having surpassed all expectations in 2017, the growth rate of the EU's currency area dropped to just 0.4 percent during the first three months of 2018, down from 0.7 percent for the final quarter of 2017.

On a year-on-year basis, the eurozone's GDP growth slowed from a rate of 2.8 percent to 2.5 percent.

The last time the region's growth was this slow was in the summer of 2016, returning the eurozone to its post-crisis state of nervousness over whether it could sustain healthy growth rates for a long period.

Measures of output in industry and construction, as well as figures for retail sales, had recently pointed toward slower growth.

Economists believe that an unusually cold and snowbound March in Northern Europe had some impact on growth, as did strikes in Germany and France. There was no breakdown yet from Eurostat on what caused the slowdown.

European Central Bank president Mario Draghi said last week that the bank would watch the data in the months ahead with “caution”. Draghi stressed, however, that policymakers remained optimistic that the region's economy would stay strong enough to support a rise in inflation closer to the ECB's goal of less than 2 percent.

Uncertainty about the economy is likely to weigh on the ECB's next big decision over when and how to end its bond-buying stimulus program.