According to preliminary data by Eurostat, eurozone growth hit 2% in the second quarter, which is seen as a rebound from recession.
Q2 2021 hedge fund letters, conferences and more
Europe's Major Economies See Positive Recoveries
The information was revealed on Friday and points to how the region is coming back from two consecutive quarters of contraction, 0.3% in the first quarter and 0.6% in the final quarter of 2020, as reported by CNBC.
“Compared with the same quarter a year ago, the latest GDP reading represents a 13.7% increase.”
Major economies saw positive recoveries, as France grew by 0.9% compared to the previous quarter, and Germany recovered from a 2.1% slump in Q1, to hit 1.5% growth in the second quarter.
In Europe’s biggest economy, the comeback was pulled by profits from the higher-priced cars sold by Mercedes-Benz, and by Volkswagen’s Audi and Porsche luxury brands. Growth was accrued despite the semiconductor shortage that has hit the automotive sector so badly.
The countries that reported the highest growth rate in Q2 are Portugal, Austria, and Latvia.
Still, the economic forecast for eurozone growth is cautious, due to the surge of COVID-19 infections as the Delta variant is now dominant in 19 of the 28 countries.
Eurozone Growth And COVID-19
Edoardo Campanella, economist at UniCredit Bank, in Milan, told Euronews: “Given its reliance on tourism, the Spanish economy looks especially vulnerable to the delta variant that is forcing several regions in the country to impose new restrictions, while foreign governments are discouraging trips to the Iberian Peninsula.”
Across Europe, people remain coy over going out due to the rise in Covid cases. The good pace of the inoculations and the low impact of hospitalizations haven’t done much to stimulate consumers' appetite.
Still, Claus Vistesen, chief Europe economist at Pantheon Macro, said, “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.”
Sill, “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.”
The European Central Bank estimates that eurozone growth could hit 4.6% by the end of 2021, and a further 4.7% next year. Eurostat indicated in another release that annual inflation is expected to hit 2.2% this month, up from 1.9% in June.
“Market players and central bankers are highly focused on this set of data as they try to determine whether a recent surge in consumer prices is transitory or not.”
