Growth sinks in Q2 on downbeat consumption and exports
A third estimate confirmed that the Eurozone economy lost traction in the second quarter, suppressed by a weaker performance from both the domestic and external sides of the economy. According to Eurostat, GDP increased a seasonally-adjusted 0.2% in Q2 from the previous quarter, half that of Q1’s 0.4% expansion. Q2’s reading was unchanged from the two flash estimates and marks one of the slowest readings in the past four years.
Household spending growth decelerated to 0.2% over the previous quarter in Q2, from Q1’s 0.4% and driving the slowdown in the domestic economy. Diminishing gains in the labor market and lower confidence likely contributed to the slowdown. On a brighter note, fixed investment growth accelerated from 0.2% in Q1 to 0.5% in Q; government consumption, however, slid from 0.4% growth to 0.3%.
The external sector subtracted marginally from growth in the quarter as exports growth stalled. Exports growth flatlined in Q2, amid a subdued global economy and overall adverse external environment (Q1: +0.9% quarter-on-quarter). Import growth also slowed, coming in at 0.2% in Q2, from 0.4% in Q1.
Compared with the same quarter of 2018, seasonally-adjusted GDP rose 1.2% in Q2, slightly below Q1’s 1.3%.