According to figures published by the European Union’s statistics office in its first estimate, GDP in the 19-country bloc grew 0.3% quarter-on-quarter in the three months to the end of June, which represents a 1.2% climb year-on-year.
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The numbers kick off a morning of eurozone GDP figures that are expected to show that a weaker euro exchange rate, lower oil prices and the European Central Bank’s massive stimulus program have done little to lift the region onto a higher growth path.
Companies that were selling down their inventories after building them up in the first quarter accounted for much of the stagnation, dragging GDP growth down by 0.4 percentage points. Spain’s GDP expanded 1% on a quarterly basis, the fastest among the large eurozone economies, suggesting it is recovering from a severe housing collapse that crippled its economy in the wake of the global financial crisis. While the dominant Germany economy transitioned its divestiture of the world-famous mark into the euro, weakening its currency status, it has provided its already triumphant export economy with greater competitiveness, due to the euro’s relative weakness.
Europe has been growing more reliably in the last six months or so than it previously had, and fears of a triple-dip European recession have largely disappeared. While German growth accelerated, the improvement was less than anticipated, and France’s economy stagnated. The Austrian and Dutch economies grew just 0.1 per cent quarter-on-quarter. More than two thirds nonetheless stuck with their guidance for the year as a whole as geopolitical and economic uncertainties remain for the second half of the year. That fell short of the median prediction by economists that the 0.4 per cent pace of the first quarter would be maintained.
Interestingly, the only country that shrunk the second quarter was Finland. Preliminary Greek data on Thursday put its expansion at 0.8 per cent, though that doesn’t capture the impact of the capital controls in July. “Its economy is driven by both exports and internal demand and this means that as long as the euro area continues to recover, there shouldn’t be a problem”.
Rogers cautioned that even if “the major existential risks” the eurozone has faced ease, the risk is that governments will not show the same sort of urgency about making their economies more dynamic.
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“Today’s zero figure is a rather bad surprise, dampening hopes of significantly above 1pc GDP growth this year”, said Julien Manceaux, an economist at ING.
