The eurozone’s second quarter GDP growth beat analyst estimates but Germany—the region’s largest economy—stagnated, highlighting uneven growth in the region which continues to face record inflation and uncertainty around energy supplies amid Russia’s war in Ukraine.
According to data published by the EU’s statistical office Eurostat, GDP in the 19 nations using the euro grew 0.7% comfortably beating out analyst estimates of 0.2% growth.
Spain and Italy recorded strong growth numbers of 1.1% and 1% respectively, aided by the return of tourists to the country during the summer after the end of Covid lockdowns, Bloomberg reported.
France, whose economy contracted 0.2% in the first quarter, also beat estimates reporting 0.5% growth in Q2.
The Eurozone’s largest economy remained a major outlier, however, reporting 0% GDP growth as its industry continues to face the threat of a potential gas cut off by Russia during the critical winter months.
Austria reported GDP growth of 0.5% for the quarter while Portugal’s economy shrank by 0.2% during the same period.
8.9%. That is the Eurozone’s rate of annual inflation for the month of July 2022, Eurostat reported on Friday. This is an all time record high for the region, up from the previous record of 8.6% reported last month. Energy inflation for the month stood at 39.7%, as the region faced a squeeze in the supply of energy from Russia as it retaliates against the bloc’s sanctions following its invasion of Ukraine.
Despite unexpectedly positive numbers, the region continues to face a threat of recession as it braces for a possible shutdown of natural gas supply from Russia. Supply of Russian natural gas—which is critical for German industry and an essential means of electricity generation in several EU nations—through the key Nord Stream 1 pipeline slowed to 20% of its overall capacity earlier this week as Russian officials blamed equipment problems. Prior to that, members of the European Union agreed to cut their usage of gas by as much as 15% until March 2023, to help tide over the current supply crunch. Last month, Germany’s economy minister Robert Habeck warned that Russia’s throttling of supplies could trigger a Lehman Brothers-style collapse of the continent’s energy sector.