Eurozone economic growth outstrips forecasts

The Eurozone economy is recovering much faster from the Covid crisis than experts’ forecasts as the vaccine rollout and the reopening of the services industry boosts consumer spending, shows new figures published today.

The Eurozone economy grew two per cent in the second quarter of this year compared to the same period last year, according to Eurostat, the area’s official statistics agency.

Year-on-year growth hit 13.7 per cent.

Read more: US economic growth falls short of expectations

Economists polled by Reuters had expected a 1.5% quarterly and a 13.2% annual increase.

The figures come as the US economy grew at a much slower pace than analysts had forecasted.

Portugal registered the highest quarterly growth rate, up 4.9 per cent, driven by an uptick in international travellers visiting the country.

Output in Germany, the Eurozone’s largest economy, grew 1.5 per cent in the second quarter of this year, while France’s economy grew a meagre 0.9 per cent over the same period.

Spain recorded the highest yearly growth, up 19.8 per cent, as the country’s recovery accelerated after the reopening of the cafes, bars and restaurants.

The accelerating vaccine rollout in the Eurozone has enabled countries to lift restrictions on sectors of the economy that rely on social and face-to-face interaction to generate income.

The services industry represents a significant proportion of output in the Eurozone, meaning the lifting of Covid measures has provided a boon for the area’s economy.

Bert Colijn, senior economist at ING, said: “A strong GDP figure confirms that the economic rebound is underway. It probably already started at some point in the first quarter as lockdowns have generally been eased since then, but the eurozone economy has experienced a bumpy ride.” 

Read more: Eurozone construction activity continues rebound from Covid lows

Eurostat also said Eurozone inflation accelerated to 2.2 per cent in July, the highest rate since October 2018 and higher than the European Central Bank’s target, up from 1.9 per cent in June and above the mean expectation of economists of two per cent.

Unemployment in the region fell slightly in June to 7.7 per cent.