FX.co ★ Eurozone Economy Expands 0.1% Only in Q2

The Eurozone economy experienced a modest growth of 0.1% quarter-on-quarter in the second quarter of 2025, marking its slowest expansion since the final quarter of 2023, a deceleration from the 0.6% observed in the first quarter, as confirmed by Eurostat's third estimates. This slowdown can be attributed to a prior quarter boost stemming from tariff front-loading, with ongoing uncertainties regarding US trade policies fostering increased caution among both businesses and consumers. Household spending exhibited a reduced expansion (0.1% compared to 0.3%), and both gross fixed capital formation (-1.8% compared to 2.7%) and exports (-0.5% compared to 2.2%) experienced contractions. In contrast, imports remained steady following a 2.2% increase in the preceding period, while public expenditure saw a recovery (0.5% compared to -0.1%). Additionally, inventories made a beneficial impact on GDP growth. Within the bloc's major economies, GDP contracted in Germany (-0.3%) and Italy (-0.1%), but grew in France (0.3%) and Spain (0.7%). On a year-on-year basis, Eurozone GDP increased by 1.5%, revised upwards from an initial estimate of 1.4%, following a revised increase of 1.6% in the first quarter.