The eurozone economy was expected to lose momentum in the second quarter of 2026.
Instead, it surprised to the upside.
Eurostat’s preliminary estimate showed GDP expanding by 0.4% quarter-on-quarter, up from flat growth in the first quarter and ahead of economists’ expectations for a 0.2% increase.
Across the European Union, growth accelerated to 0.5%, from 0.1% previously. Annual growth also strengthened, reaching 1.0% in the euro area and 1.2% across the EU.
At first glance, the figures suggest the bloc is proving more resilient than feared despite higher energy prices and continued geopolitical uncertainty.
But the headline hides a much more interesting story.
Growth is becoming increasingly uneven.
Ireland, Lithuania and Sweden led European growth
“The Eurozone economy blew past the consensus in Q2 and was even stronger than our above-consensus forecast, despite the energy price shock triggered by the US-Iran war,” commented Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
Among the countries that have already released second-quarter data, Ireland posted by far the strongest quarterly expansion, with GDP surging 3.9%.
According to Pantheon Macroeconomics’ calculations, the rebound in Ireland alone added 0.1 percentage points to headline eurozone growth.
It was followed by Lithuania, where the economy grew by 1.7%, and Sweden, which expanded by 1.4%.
Southern Europe also remained resilient. Portugal recorded 0.8% quarterly growth, while Spain continued to outperform the eurozone’s largest economies with a 0.7% expansion.
At the other end of the ranking, Belgium and Austria stagnated, recording no growth during the quarter.
Germany, France and Italy all expanded, but at a slower pace than previously.
Europe’s largest economy shows slower expansion
Germany’s economy grew by 0.2%, slowing from 0.4% in the first quarter but still outperforming market expectations of 0.1%.
Pantheon Macroeconomics’ Vistesen said the data leave “a picture of resilience in the first half of the year”, helped by upward revisions to previous quarters.
The composition of growth was equally revealing. “Net exports were the main driver of Q2 GDP growth, while consumption slowed and investment fell,” Vistesen said, suggesting Germany is relying more on foreign demand than domestic spending to keep its economy expanding.
France also returned to growth, with GDP rising by 0.2% after contracting in the previous quarter.
Yet the details were less convincing.
Vistesen said “the rebound in GDP growth is encouraging, but the details are less so, particularly for investment”, pointing to weak capital spending despite a recovery in consumer demand.