Euro Area: The economy expands at faster pace in Q2
The economy grew 0.7% in seasonally-adjusted quarter-on-quarter terms in Q2, above Q1’s 0.5% expansion. Compared with Q2 2021, seasonally-adjusted annual GDP increased 4.0% in Q2, following the 5.4% rise recorded in the previous quarter.
The quarterly acceleration came on the back of tightening labor markets and accumulated savings, despite soaring inflation and considerable supply disruptions due to renewed Covid-19 lockdowns in China and the war in Ukraine. In terms of individual countries, Spain’s economy expanded 1.1% over the previous quarter in Q2, Italy’s GDP increased 1.0% and France’s economy expanded 0.5%. Meanwhile, Germany’s economy stagnated.
Commenting on the release, Bert Colijn, senior Eurozone economist at ING, stated:
“The acceleration in economic growth is mainly due to reopening effects and masks underlying weakness due to high inflation and manufacturing problems. […] From here on, we expect GDP to continue a downward trend as the services reopening rebound moderates, global demand softens and purchasing power squeezes persist. We expect that to result in a mild recession starting in the second half of the year.”