Brussels (Belgium) (AFP) – The eurozone economy unexpectedly expanded in the second quarter of 2025, official data showed Wednesday, despite international trade tensions clouding the global outlook. The EU’s official data agency reported that the 20-country single currency area recorded growth of 0.1 percent over the same period last year — slightly better than the flat performance forecast by analysts. The eurozone economy showed “resilience despite US trade volatility,” according to ING Bank’s Bert Colijn.
Since US President Donald Trump returned to the White House in January, he has hit the EU with a series of painful tariffs, but the bloc struck a deal on Sunday to avert an escalating trade war. EU officials hope the agreement will bring certainty for companies and stave off further economic pain, though analysts warn that Europe will still take a hit to its output from the deal, which foresees a 15-percent US tariff on most exports.
Eurostat data on Wednesday indicated that Europe’s second-largest economy, France, beat expectations to grow by 0.3 percent in the second quarter, but it was Spain that was the star performer, recording growth of 0.7 percent between April and June. Portugal also recorded 0.6 percent growth in the same quarter. Conversely, Europe’s economic powerhouse, Germany, unexpectedly shrank by 0.1 percent from the previous quarter. Italy’s economy also contracted by 0.1 percent in the period.
The eurozone growth of 0.1 percent came after the single currency area’s economy grew by 0.6 percent in the first quarter. However, economists warned against reading too much into the first-quarter data, stating it was due to an extreme change in Ireland’s figures. The 27-country EU economy expanded by 0.2 percent over the April-June period from the previous quarter, following a 0.5 percent growth in the first three months of 2025.
The year has been full of uncertainty for Europe. Trump threatened 30-percent levies on most European goods if Brussels and Washington did not clinch a deal by August 1. Sunday’s agreement lacks details — with much still being negotiated — but the two sides confirmed that a majority of EU products would face the 15-percent tariff rate, including pharmaceuticals and semiconductors. Economists warned that the deal would impact the eurozone economy.
“With the 15 percent US universal tariff likely to subtract around 0.2 percent from the region’s GDP, growth is likely to remain weak in the rest of this year,” said Franziska Palmas, senior Europe economist at Capital Economics. “Looking ahead, expect swings in trade to continue to influence the economy,” added ING’s Colijn, who nonetheless sounded an optimistic note for the future.
“For the short term, don’t expect miracles, but at the same time, there are new signs of life starting to emerge for the eurozone economy,” he mentioned. In the first half of the year, European companies rushed to ship more goods to avoid Trump’s higher tariffs. France’s Economy Minister Eric Lombard stated that the figures for France showed that the country’s companies also proved resilient to US tariff hikes.
France is now pushing for zero tariffs on alcohol, including champagne and wines as well as spirits, with talks still ongoing on the issue. European officials have indicated that the deal included an agreement on mutual tariff exemptions for certain goods, but the specifics remain to be finalized.
© 2024 AFP
