Eurozone economy ticks higher in second quarter

Finance | 30 Jul 2021 6:54 pm

The euro zone economy expanded in the second quarter of this year as various governments tiptoed around their economic reopening, preliminary data has shown, CNBC reports.

The 19-member economy grew by 2 percent in the three months through to the end of June, according to preliminary estimates published on Friday by Eurostat. The region contracted by 0.3 percent in the first quarter and 0.6 percent in the final quarter of 2020 — two consecutive quarters of economic contraction are defined as a technical recession.

Compared with the same quarter a year ago, the latest GDP reading represents a 13.7 percent increase.

Portugal, Austria and Latvia registered the highest quarterly growth rates.

However, the economic outlook remains delicate. The highly transmissible  Delta variant has led to a surge of infections in recent weeks for many countries. Though the number of hospitalizations has not been severely impacted and the number of inoculations against the virus has gathered pace, it is thought some consumers will hold back from enjoying new liberties as infections continue to rise.

“Looking ahead, we maintain our view, as does the consensus, that the third quarter will be even better, as momentum carries over uninterrupted, but downside risks loom,” Claus Vistesen, chief Europe economist at Pantheon Macro, said in a note this week.

He noted that “new virus cases are now shooting higher — driven by the Delta variant — and evidence from the U.K. suggests that it is holding back economic activity.”

Overall, the European Central Bank expects GDP in the eurozone to reach 4.6 perceny by the end of the year, followed by 4.7 percent next year.

 



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