The euro zone’s economy exceeded expectations in the second quarter of 2024, according to preliminary data from the European Union’s statistics office released on Tuesday. The region’s gross domestic product (GDP) increased by 0.3% in the three months ending in June compared to the previous quarter, surpassing the 0.2% growth forecasted by economists surveyed by Reuters.
The growth rate for the first quarter remained unchanged at 0.3%, as reported in the initial reading earlier this year. In contrast, the euro zone experienced a technical recession in the latter half of 2023, with GDP contracting in the third and fourth quarters, based on revised data released earlier this year.
Bert Colijn, a senior economist at ING specializing in the euro zone, noted in a statement on Tuesday that the data suggests a modest recovery in the region’s economy. He mentioned that after a year of stagnation in 2023, the recent growth is a positive sign, indicating a cautious recovery and a better economic situation compared to the previous year.
However, Colijn expressed uncertainty about the future trajectory of the economy, stating that recent data do not instill much confidence in the euro zone’s economy gaining momentum. Data released earlier on the same day revealed an unexpected 0.1% contraction in Germany’s GDP for the second quarter, falling short of analysts’ expectations of a 0.1% growth.
Germany was among the four countries in the euro zone that experienced a decline in GDP in the second quarter, alongside Latvia, Sweden, and Hungary, according to the European Union’s statistics office. Klaus Wohlrabe, head of surveys at ifo, remarked in a note on Wednesday that the German economy was facing a crisis and was not anticipated to see significant improvement in the third quarter.
On the other hand, Ireland recorded the highest growth rate at 1.2% in the second quarter, while France, the second-largest economy in the euro zone, reported a 0.3% GDP growth for the same period, as announced by its statistics office on Tuesday.
Inflation data for the euro zone is scheduled for release on Wednesday. These latest figures follow the European Central Bank’s decision to maintain interest rates at its recent meeting, with the possibility of a rate cut in September being considered.
