Euro Zone Grows Slightly Ahead of Expectations in Q2

Eurozone economic growth reached 0.1% during the second quarter of 2025 when measured against the previous period, according to preliminary figures.
Reuters surveyed economists who predicted that the Eurozone economy would remain stagnant during the second quarter.
The economic output from Germany, the biggest economy in the region, decreased by 0.1% during the second quarter of 2025 when measured against the prior period.

Eurozone economic activity saw a slightly positive increase of 0.1% during the second quarter, surpassing expectations when measured against the prior three months, according to preliminary figures released by Eurostat on Wednesday.

Economists surveyed by Reuters expected the eurozone economy to remain stagnant during this period, after experiencing a 0.6% increase in the first quarter.

"The decline in eurozone GDP growth during the second quarter was not unexpected, as the impact of tariff-related pre-emptive actions faded," noted Jack Allen-Reynolds, deputy head of the Euro Zone economics team at Capital Economics, in a report.

"In general, the data indicate that the Eurozone has shown resilience against changes in U.S. trade policies up until now. The anticipation of tariffs provided an economic lift during the first quarter, and the effects of trade policy uncertainty appear to have remained contained thus far," he noted.

U.S. tariffs and their impact have remained a major issue for European economies throughout this year. U.S. President Donald Trump's so-called mutual taxes initially took effect in April when the second quarter began.

The responsibilities were then, however temporarily diminished, yet the past several months have been marked by significant uncertainty as discussions for a trade accord continued. Certain elevated tariff rates within specific sectors, including those on autos and steel and aluminum have also been in place.

The European Union during the weekend agreed toward a trading agreement with the U.S., which involves applying 15% taxes on imports from the group. Certain products will be excluded, and duties on vehicles have been lowered to standard rates.

European bond rates remained largely unchanged following the data announcement, with both the French and German 10-year bonds rose by fewer than one basis point.

German economy contracts

On Wednesday morning, initial figures released by the statistical office Destatis indicated that production in Germany, the biggest economy within the European Union, declined marginally by 0.1% during the second quarter of 2025 compared to the preceding three months.

The number, which accounts for changes in prices, calendars, and seasons, met the predictions of analysts surveyed by Reuters and indicated a significant decline from an updated 0.3% growth during the first quarter.

Machinery and equipment investment, along with construction activity, declined during the second quarter compared to the prior three months, whereas both private and public spending rose, according to data from Destatis.