The eurozone economy posted a stronger-than-expected growth rate of 0.3% in the second quarter of 2024, overcoming fears of a broader slowdown despite Germany’s unexpected contraction.
Economic performance overview
According to preliminary data released by the European Union's statistical office, eurozone gross domestic product (GDP) rose 0.3% from April to June, beating the 0.2% growth forecast by economists polled by Reuters. That follows a confirmed 0.3% increase in the first quarter of the year.
Context and analysis
The revised figures suggest that the eurozone experienced a technical recession in the latter part of 2023, with GDP declining in both the third and fourth quarters. However, recent data point to a modest recovery.
Bert Colijn, senior eurozone economist at ING, said the latest figures provide a glimmer of hope for the region's economic outlook. “After a year of stagnation, this growth is a welcome sign of a cautious recovery,” Colijn said, while also expressing caution about future growth prospects.
Germany's economic contraction
Germany, the eurozone's largest economy, saw its GDP decline by 0.1% in the second quarter, defying analysts' expectations for a slight increase. The contraction puts Germany among the few eurozone countries to post negative growth, along with Latvia, Sweden and Hungary.
Klaus Wohlrabe, head of surveys at the Ifo Institute, noted that the German economy remains “stuck in crisis” and does not expect any significant improvement in the third quarter.
Strong performers and upcoming data
Ireland led the eurozone with a robust 1.2% GDP growth in the second quarter. France, the region's second-largest economy, also performed well, posting a 0.3% GDP increase.
Eurozone inflation data is due to be released on Wednesday, following the European Central Bank's recent decision to keep interest rates unchanged, leaving the door open for potential rate cuts in September.
