After a robust begin to the yr, the eurozone economic system misplaced some steam within the second quarter of 2025, with contemporary knowledge displaying a transparent slowdown. Germany, the bloc’s financial powerhouse, fell again into contraction territory, whereas Spain continued to outpace its friends.
In keeping with the preliminary flash estimate launched on Wednesday, seasonally adjusted gross home product (GDP) rose by 0.1% within the eurozone and by 0.2% within the European Union within the second quarter of 2025, in contrast with the earlier quarter.
Whereas the studying barely surpassed economist expectations of a flat development price, this marks a notable deceleration from the 0.6% and 0.5% expansions seen within the eurozone and EU respectively within the first quarter.
12 months-on-year, development additionally eased somewhat, with the eurozone up 1.4% and the EU up 1.5%, each barely beneath the tempo seen earlier in 2025.
“Though the slowdown is to a big extent a by-product of a misleadingly wholesome Q1 quantity, broad-based weak spot throughout nationwide knowledge signifies that the economic system lacks momentum, with solely a handful of nations blowing into its sails,” mentioned Riccardo Marcelli Fabiani, senior economist at Oxford Economics.
Spain and Portugal shine, Germany drags
The slowdown wasn’t uniform throughout the continent.
Spain stood out with the strongest quarterly development at 0.7%, due to stable shopper spending, a rebound in enterprise funding, and rising exports.
“Spain is in one other league, displaying stubbornly sturdy dynamism. The average Q2 decline in Irish GDP suggests that there’s ample room for additional correction,” Marcelli Fabiani added.
Portugal and Estonia additionally delivered stable outcomes, increasing by 0.6% and 0.5%, respectively.
Alternatively, Germany shrank by 0.1%, ending a run of modest development. It marked the nation’s first contraction since mid-2024.
The decline was primarily resulting from weaker funding in equipment and building, though family and authorities spending nonetheless provided some assist.
Italy’s GDP contracted by 0.1% within the second quarter, reversing the 0.3% acquire recorded within the first quarter and defying market expectations of a 0.2% enhance. It was the nation’s first contraction since Q2 2023, reflecting weak home demand and softening industrial exercise.
There was some excellent news from France, the place the economic system picked up greater than anticipated. GDP rose 0.3% — one of the best lead to practically a yr — helped by stronger home demand.
But Oxford Economics stays cautious, noting that France’s enlargement paints an excessively rosy image, pushed largely by stockbuilding, whereas each home demand and web commerce really dragged on GDP.
Markets regular as traders digest US-EU commerce deal
Monetary markets responded calmly to the information, with eurozone property stabilising following latest volatility tied to the US-EU commerce deal, which analysts broadly view as tilting in Washington’s favour over Brussels.
The euro was regular at $1.1550, recovering barely after enduring its worst two-day drop since February 2023.
The EURO STOXX 50 index edged 0.1% greater, whereas the broader EURO STOXX 600 was flat.
French shopper staples have been among the many prime performers, with Danone rising 6.7% and L’Oréal up 4% after reporting robust quarterly earnings boosted by Chinese language demand.
Nokia additionally rallied 5.4%. In distinction, Adidas fell over 6% following a income miss and a revenue warning, whereas Mercedes-Benz Group dropped 1% after reporting a halving of its first-half income and slicing its full-year income forecast beneath final yr’s €146 billion.
Germany’s DAX index was unchanged at 24,200 factors, about two proportion factors beneath its all-time excessive, whereas Italy’s FTSE MIB climbed 0.3% to 41,350 factors, its highest since July 2007 and eyeing its ninth constructive session within the final ten.