Eurozone Returns to Economic Growth with Ireland Leading the Way
New figures from Eurostat reveal that the eurozone experienced economic growth in the second quarter of the year, with Ireland leading the pack in terms of gross domestic product (GDP) increase among member states. The seasonally adjusted GDP of the eurozone grew by 0.3% between April and June compared to the previous three months. In comparison to the same period last year, the eurozone GDP grew by 0.6%.
Ireland stood out with the highest GDP growth of 3.3% in the second quarter, surpassing all other member states. When compared to the same period last year, Ireland’s GDP growth was at 2.8%. However, it is important to note that Irish GDP growth heavily relies on the multinational sector, which recovered well following a contraction earlier this year.
To get a clearer picture of the underlying domestic activity, it is more accurate to consider the modified domestic demand (MDD) measure. This measure excludes the activity of multinationals and focuses on factors such as government spending and investment. The most up-to-date figures for MDD show a growth of 2.7% during the first quarter of the year.
Following Ireland, Lithuania experienced the next highest increase in GDP at 2.8%. On the other hand, Sweden saw a decline of 1.5%, while Latvia, Austria, and Italy experienced declines of 0.6%, 0.4%, and 0.3% respectively.
Among the largest countries in the eurozone, Spain and France showed modest growth rates of 0.4% and 0.5% respectively, driven by stronger tourism and exports. However, Germany, the largest country in the bloc, did not record any growth, while Italy experienced a decline of 0.3%.
In a separate release, Eurostat figures indicate that annual inflation across the eurozone decreased by 0.2% in July, dropping from 5.5% in June.
According to Eurostat’s flash estimates, the highest annual inflation rates are expected in food, alcohol, and tobacco, projected to be at 10.8%. Services are expected to increase by 5.6% during the month, while non-energy industrial goods are predicted to grow by 5%.
In terms of inflation, Ireland’s flash estimate for July stands at 4.6%.