Eurozone Economy Growth Slows in Q2

The eurozone economy experienced sluggish growth in the second quarter of this year, falling short of prior estimates due to stagnant domestic consumption and weakened exports.

According to final data from Eurostat, the European Union's statistics agency, the bloc's gross domestic product (GDP) only expanded by 0.1% from April to June. This is lower than the previous official estimate of 0.3% and contradicts expectations from economists polled by The Wall Street Journal.

Compared to the same period last year, the economy grew by 0.5% in the second quarter, down from the previous estimate of 0.6%.

In the first quarter, GDP also experienced growth at a rate of 0.1%, following an upward revision that revealed previously reported stagnation.

Eurostat reported that household consumption remained stagnant in this period and made "negligible contributions to GDP growth in the euro area." This suggests that elevated interest rates and inflation are continuing to impact consumers' spending habits negatively.

Exports also declined compared to the previous year, acting as a significant drag on overall growth after a period of stagnation in the previous quarter.

The sluggish growth in the 20-member bloc was primarily influenced by Germany's stagnation, as the country's traditionally strong exports and industrial output have weakened. On the other hand, France and Spain outperformed expectations in this quarter, while Italy's economy experienced a slight decline compared to the previous month.

Economists are warning that following the marginal growth in the second quarter, the eurozone economy is likely to stagnate or even worsen in the coming months. Recent gloomy figures from purchasing managers' surveys indicate that output could contract by 0.5% in the July-September period, according to a recent note by Pantheon Macroeconomics. Furthermore, consumer confidence has also weakened within the bloc in recent months.

The European Central Bank expects the economy to expand by 0.9% for the entire year compared to the previous year. However, this forecast may be adjusted downward when the bank releases fresh macro estimates next week.