Eurozone: Growth falls to two-year low in Q2
July 31, 2018
The Eurozone economy slowed in the second quarter of 2018, losing further momentum after a weak start to the year. According to a preliminary estimate released by Eurostat, GDP increased a seasonally-adjusted 0.3% in Q2 from the previous quarter, which was below Q1’s 0.4% rise and marked the slowest growth since Q2 2016. The reading was also below market analysts’ expectations of steady growth and notably below the robust growth rate observed throughout 2017. Compared with the same quarter of 2017, seasonally-adjusted GDP expanded 2.1% in Q2, which was considerably below Q1’s 2.5% increase.
While the first quarter’s slowdown had been attributed to largely one-off effects, these factors were not at play in the second quarter, which suggests that the Eurozone economy has entered a slower cruising speed. The preliminary GDP data did not include a breakdown by components, but weaker sentiment has likely dented economic momentum, while rising inflation is also expected to have taken a bite out of consumer spending. Additional data released by national statistical institutes revealed that growth waned in Italy and Spain in the second quarter but remained steady in France. More complete GDP data will be released on 14 August and 7 September.
Eurozone GDP Forecast
FocusEconomics Consensus Forecast panelists expect the Euro area economy to expand 2.3% in 2018, which is down 0.1 percentage points from last month’s forecast. For 2019, panelists see the economy expanding 1.9%.