Eurozone GDP remained in positive territory in the second quarter, but the expansion was limited.
Specifically, according to preliminary data released by Eurostat, eurozone and EU GDP grew by 0.3% every quarter, as well as in the first quarter of the year, keeping expectations low, as it appears it won’t take much to bring the economy back into recession.
The GDP data is the first benchmark for the ECB, which has focused more on the dynamics of price pressures than growth concerns so far, but that balance could shift. At its last meeting, the ECB highlighted near-term growth concerns and, as such, markets will be watching for reasons to price in accelerating rate cuts. Earlier, French GDP data was slightly better than expected and continues to point to a gradual recovery in the eurozone’s second-largest economy.
German GDP contracted in the second quarter casting a shadow over the resilience of growth in the region’s next three largest economies. GDP fell 0.1% in the three months through June, an outcome predicted by only one of 35 economists surveyed by Bloomberg. By contrast, both France and Spain grew more than forecast, while Italy slowed only slightly to 0.2% growth.