A surge in euro-area exports drove economic growth in the second quarter as domestic spending slowed, according to data published by the European Union’s statistics office in Luxembourg.
Key Points
- Exports made biggest contribution to growth, adding 0.5 percentage point
- Investment stalled while private and government consumption slowed
- Gross domestic product increased 0.3 percent from previous quarter, when it rose 0.5 percent
- GDP growth in line with Aug. 12 estimate
Big Picture
The European Central Bank has built its projections for a continued recovery on domestic demand, with rising employment bolstering consumption and investment set to benefit from more favorable lending conditions. Today’s data show how political uncertainty—the Brexit threat loomed over companies in the second quarter—can harm economic growth. The ECB’s Governing Council will holds its next policy meeting on Sept. 8, when updated GDP and inflation forecasts will be published.
Economist Takeaways
“It’s not a sign of strength that trade contributed so much to growth—it’s actually a sign of weakness,” said Aline Schuiling, senior economist at ABN Amro Bank NV in Amsterdam. “Political uncertainty is just not good for the investment climate. Domestic demand was weak, so imports were weak. The picture is one of very moderate growth moving forward.”
Other Details
- Private consumption rose 0.2 percent, contributing 0.1 percentage point to growth
- Government spending increased 0.1 percent
- Exports surged 1.1 percent, most since second quarter of 2015, while imports gained 0.4 percent
- Slovakia was fastest-growing euro-area economy in second quarter, with GDP expanding 0.9 percent
- French, Italian, Finnish economies stagnated in three months through June
