Eurozone economy growth below expectations

Despite European Central Bank support towards eurozone economy since March with large monetary stimulus, economy stalls in second quarter

Photo by: Reuters
Photo by: Reuters

The eurozone economy grew by less than expected in the second quarter, the European Union's statistics office said in its first estimate published on Friday.

Eurostat said gross domestic product in the 19 country euro area grew by 0.3 percent quarter-on-quarter in the April-June period, for a 1.2 percent year-on-year rise.

Economists polled by Reuters had expected a 0.4 percent quarterly expansion and a 1.3 percent annual gain.

The relatively slow growth came despite a large monetary stimulus from the European Central Bank, and a weak euro helping exporters.

"Looking ahead, business surveys suggest that the euro zone economy will continue to expand, led by strong growth in Spain and a solid German economy. But they offer little hope that the recovery will gain pace," Capital Economics said in a note,

"Indeed, we think it is more likely that growth in the region as a whole will slow further in the second half of the year."

Separate data also confirmed that annual inflation was 0.2 percent in July 2015, stable compared with June, but still far off the near 2 percent sought by the ECB, which has been trying to increase it with a large money-printing program.

The first reading of second-quarter GDP in the eurozone comes two days after data showed that industrial output shrank by more than expected in June.

Earlier on Friday, the German economy, the currency bloc's largest, was shown to have grown by 0.4 percent quarter on quarter, an improvement from the first quarter but still below expectations.

Data from neighboring France also missed expectations, as GDP growth there stalled in second quarter.

Italian GDP growth also missed forecasts.