Euro Area: Economy edges back to growth in Q2

Euro Area GDP Q2 2023

Euro Area: Economy edges back to growth in Q2

The economy grew 0.3% in seasonally adjusted quarter-on-quarter terms in Q2, following Q1’s flat reading and coming in slightly above market expectations.

The quarterly expansion came on the back of declining—albeit still-high—inflation, easing supply chain pressures and lower energy prices. That said, a worsening global economic outlook and higher interest rates put a lid on growth. In terms of individual countries, both the French and Spanish economies grew 0.5% over the previous quarter in Q2, Germany’s GDP was unchanged, and Italy’s economy unexpectedly shrank 0.3%.

Compared with Q2 2022, seasonally adjusted annual GDP increased by 0.6% in Q2, following a 1.1% increase in the previous quarter.

Commenting on the outlook, Bert Colijn, senior Eurozone economist at ING, stated:

“Judging by the survey data we have so far on the third quarter, the risks are to the downside for the coming quarters. Manufacturing performance continues to slump, as new orders continue to weaken, and strong services performance is waning as reopening effects from the pandemic fade. With monetary tightening still expected to have its most dampening effect on growth later, continued broad stagnation of economic activity remains the most likely outcome for the coming quarters.”

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