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EsEurozone GDP Rises 0.4% in Q2, EU Up 0.5% as Ireland Leads
Eurostat's flash estimate shows eurozone GDP up 0.4% q/q in Q2 2026, ahead of 0.2% forecasts after flat Q1. EU output rose 0.5%, led by Ireland, Lithuania and Sweden.
Eurostat’s preliminary estimate indicates the eurozone economy grew 0.4% quarter-on-quarter in Q2 2026, following flat growth in Q1 and exceeding expectations for a 0.2% rise. Across the European Union, GDP increased 0.5%. On an annual basis, growth reached 1.0% in the euro area and 1.2% in the EU. The period was marked by higher energy costs and uncertainty linked to the US–Iran war’s effect on energy markets. At the same time, eurozone banks tightened credit standards in the second quarter as geopolitical and energy risks increased.
“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.
Growth was uneven across member states. Ireland posted the strongest quarterly gain, with GDP up 3.9%. Pantheon Macroeconomics estimates Ireland’s rebound alone added 0.1 percentage points to the eurozone total. Lithuania expanded 1.7% and Sweden 1.4%. In Southern Europe, Portugal grew 0.8% and Spain advanced 0.7%. Belgium and Austria recorded no growth in the quarter.
Germany, the bloc’s largest economy, grew 0.2% in Q2, down from 0.4% in Q1 yet ahead of market expectations of 0.1%. Earlier quarters were revised higher. Vistesen noted: “Net exports were the main driver of Q2 GDP growth, while consumption slowed and investment fell.”
France returned to growth, with GDP up 0.2% after a contraction in the previous quarter. Vistesen pointed to weak capital spending even as consumer demand improved.
Spain continued to outpace larger peers, with growth accelerating to 0.7% in Q2. “The Spanish economy appears to have been unscathed by the energy shock so far,” observed Ankita Amajuri, Europe economist at Pantheon Macroeconomics, citing firm household spending, resilient exports, fiscal support and expanding renewable energy capacity.
Italy expanded 0.2%, easing from 0.3% in Q1 and above expectations of 0.1%. Amajuri assessed that Italy is more exposed than Spain to the recent rise in energy costs if prices remain high in the second half of the year.
Early inflation signals for July point to firmer price pressures in several economies. Estimates from Pantheon Macroeconomics put German headline inflation near 2.7% in July, up from 2.3% in June, based on stronger regional readings in Bavaria, North Rhine–Westphalia, Saxony and Hesse. Spain’s preliminary data showed consumer prices up 3.5% year-on-year in July, from 3.2% in June, while core inflation edged up to 3.0%. Attention now turns to the eurozone’s July inflation release on Thursday, with economists expecting annual inflation to rise to 2.9% from 2.8% in June.
