Eurozone Q2 GDP Rises More Than Expected

(RTTNews) - The euro area economy logged a steady growth in the second quarter despite an unexpected contraction in Germany, official data showed on Tuesday.

Gross domestic product advanced 0.3 percent in the three months to June, which was similar to the first quarter growth, preliminary flash estimate published by Eurostat showed on Tuesday.

The rate marginally exceeded economists' forecast of 0.2 percent.

Year-on-year, economic growth rose slightly to 0.6 percent, while GDP was expected to post 0.5 percent growth again in the second quarter. The next estimates will be published on August 14.

German was the growth laggard of the euro area, while Spain continued to be the growth engine of the currency bloc. France posted a faster-than-expected growth. Italy kept growth in the second quarter but the pace softened due to negative contribution from the net foreign trade.

France's economy registered a steady 0.3 percent expansion in the second quarter on investment and exports. Spain logged a strong stable growth of 0.8 percent, while growth in Italy slowed to 0.2 percent from 0.3 percent.

Capital Economics' economist Franziska Palmas said surveys suggest a further slowdown may lie ahead. The composite Purchasing Managers' survey was consistent with GDP stagnating in July, the economist noted.

If this trend persists in the rest of the quarter, third quarter GDP could be even weaker than below-consensus forecast of 0.2 percent, Palmas added.

ING economist Bert Colijn said the recovery from a long period of stagnation continued in the second quarter but signs of slowing are already prevailing.

For the European Central Bank, this means that the growth acceleration compared to 2023 should not be a hindrance to further rate cuts, the economist noted.