The 19-nation eurozone grew by 0.3 percent in the second quarter, reports said, citing official data. Germany -- Europe’s largest economy -- grew by 0.4 percent while France witnessed no growth.
Overall growth fell short of analysts' expectations, Bloomberg reported, and noted that five countries in the economic bloc missed economists’ growth estimates. The European Central Bank (ECB) described the performance as “disappointing” while noting that growth would be further hurt if the U.S. Federal Reserve raised interest rates, as it is widely expected to do so in September. The ECB also raised concerns about an "expected adverse impact" from financial developments in China.
“This underlines the need for the ECB to maintain and perhaps extend its policy support,” Jennifer McKeown, an economist at Capital Economics in London, told Bloomberg, adding that while growth would continue, it would be hampered as the euro grows stronger and oil prices strengthen.
Italy’s economy grew by 0.2 percent while the Netherlands clocked a 0.1 percent growth, both down from estimates of 0.3 percent. Portugal grew by 0.4 percent, also falling short of an estimated 0.5 percent, Bloomberg reported.
Although the German economy too disappointed, exports and domestic consumption reportedly provided it with an optimistic future.
“Exports are a key pillar for the German economy and global demand is currently too low to sustain it at full speed,” Johannes Gareis, an economist at Natixis SA in Frankfurt, told Bloomberg. “But the German economy finds itself generally in a comfortable situation and in fact it is set to profit from increasing tailwinds in the coming months.”