Eurozone economic growth halved in the second quarter, but the 19-nation single currency area moved further away from deflation.
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“With the Brexit risk materialising on June 23, the eurozone growth outlook has weakened”, said Florian Hense, economist at Berenberg Bank in anticipation of the growth data. On the year growth slowed to 1.6% from 1.7%.
Growth in the bloc, meanwhile, slowed in the second quarter to 0.3%, with analysts warning that the consequences of Brexit could harm the economy further, later in the year.
Eurostat provides no breakdown of growth drivers in its initial GDP report, and may revise its estimates in an August 12 bulletin.
The main talking point is the drop-off in France’s economic expansion – it registered growth of 0.7% in the first quarter – but recorded no growth during the second quarter.
“The +0.3% quarterly gain in GDP came as something of a relief after this morning’s very weak GDP data for France”.
First estimates on euro zone inflation released on Friday by Eurostat showed a slight rise to 0.2 per cent in July from 0.1 per cent the previous month, but still far away from the European Central Bank target of a rate close to 2 per cent, while core inflation remained stable.
The agency said GDP growth for the EU’s 28 member states as a whole stood at 0.4 per cent, for a year-on-year gain of 1.8 per cent.
Increases in the prices of food, alcohol & tobacco were off-set by low energy costs.
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The figure was above initial expectations for a steady 0.1% inflation rate but followed better-than-forecast German price data on Thursday, which put the annual rate of price growth in Europe’s largest economy at 0.4% in July, up from 0.3%.
