The eurozone economy has shrugged off growing trade tensions to grow faster than previously estimated in the three months to the end of June, as Germany and the Netherlands beat expectations.
GDP growth in the eurozone was revised higher from 0.3% to 0.4% between April and June, matching the rate in the first quarter, said Eurostat, the EU’s statistical office. GDP was also up 0.4% in the 28 EU countries.
The previous reading had sparked concerns over a slowdown in the 19 nations in the eurozone.
Germany, the eurozone’s biggest economy, surprised with 0.5% growth in the second quarter. It has grown for four years in a row, putting it on track for its longest expansion on record.
It benefited from stronger demand from households and companies, while exports also rose. Growth in the first quarter was revised up to 0.4% from 0.3%.
Germany outpaced the UK, which grew 0.4% in the second quarter, and France, which expanded 0.2%.
The Dutch economy was even stronger, growing 0.7% in the second quarter, with trade bouncing back from a weak first quarter.
However, the independent economist Ulrik Bie cautioned that German growth could disappoint in coming quarters, hit by mounting global trade tensions and Turkey’s financial crisis.
Senior ING economist Bert Colijn noted that eurozone growth had eased from a “spectacular 2017”, with growth in household incomes slowing due to higher inflation and only modest wage growth and weaker confidence, hit by trade concerns.
“With global concerns anything but subsiding, it seems that subdued investment will remain likely in the months ahead. A eurozone economy performing at the current pace of 0.4% for the rest of the year, therefore, seems to be the base case for the moment.”
