Eurozone: 2Q GDP confirmed at 0.3% QoQ - ING

Bert Colijn, Senior Economist at ING, notes that the final estimate of Q2 Eurozone GDP growth has been confirmed at 0.3% QoQ and 1.6% YoY.

Key Quotes 

“Even though economic and geopolitical uncertainties surrounding the Eurozone are large at the moment, growth was almost entirely driven by stronger export growth. Exports increased 1.1%, after stagnating in Q1. As trade in goods decreased slightly in Q2, this was mainly because of a strong increase in exports of services. Imports only increased by 0.4%, making the growth contribution from net exports 0.4%.

While the domestic economy had driven the strong growth in the first quarter of the year, it performed poorly in the second. This is partly because of base effects from a strong January in consumption, but it also reflects the stagnation in unemployment declines of the past months, weaker confidence and a surge in the oil price. These factors took the wind out of the sails of the Eurozone consumer and this was reflected by growth in household consumption of just 0.2%.

Investment even stagnated in the second quarter, which reflects the uncertainty about economic conditions in the second half of the year. Also government spending stalled in Q2, while inventories were a drag of -0.2% on growth. As economic uncertainty has only increased since the end of the second quarter, we are not expecting a recovery of growth in the second half of the year.

With exports to important trading partners like the UK under pressure, it seems that the Eurozone has little left in the tank to boost growth in the final months of the year. Consumption could recover somewhat, but no miracles can be expected with weakening employment growth. It therefore seems likely that growth will slow down somewhat further in the months ahead. Still, with little data from the post-Brexit vote environment available, it seems unlikely that the ECB will come out with new significant action to boost growth on Thursday.”