Eurozone GDP Q2 2016


Second estimate confirms GDP growth halved in Q2

More complete data confirm that Eurozone growth halved in the second quarter as transitory tailwinds disappeared and France’s economy stalled. According to a flash estimate, the Eurozone economy increased a seasonally-adjusted 0.3% in Q2 over the previous quarter, which below Q1’s 0.6% growth and marked the worst result since Q2 2014. The reading was unchanged from the preliminary flash estimate released on 29 July. Compared with the same quarter of 2015, GDP expanded 1.6% in Q2, which was a notch down from the 1.7% tallied in Q1.

The flash GDP data did not include a breakdown by components, however, the slowdown was likely partly due to temporary factors and fading tailwinds. The first quarter’s strong reading was boosted by the early timing of Easter and a mild winter. Despite the slower expansion recorded in Q2, the domestic economy likely remained the driver of growth as the unemployment rate fell to the lowest level since July 2011 and an expansionary monetary policy continued to support economic activity in the bloc.

Meanwhile, additional data released by statistical offices across the continent showed that the economies of France and Italy economies ground to a stop in Q2 and recorded zero growth over the previous quarter. Germany’s economy also slowed notably falling from a 0.7% increase in Q1 to a more moderate 0.4% rise. Meanwhile, Spain continued to be one of the region’s best performers and grew a solid 0.7% quarter-on-quarter. More detailed data including a breakdown by components will be released on 6 September.

FocusEconomics Consensus Forecast panelists expect the Euro area economy to expand 1.5% in 2016, which is unchanged from last month’s forecast. For 2017, panelists expect the economy to expand 1.4%.

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Eurozone GDP Chart

Euro GDP Q2 2016 1

Note: Quarter-on-quarter changes of seasonally-adjusted GDP and year-on-year variation in %.
Source: Eurostat

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