Eurozone out of recession after economy grows 2%

The eurozone is out of recession as the economy of the region grew by 2% in the second quarter of the year.

The region is currently recovering following a surge in Covid cases in the winter. Figures suggest growth is seen in all the individual national economies reporting data.

The economy shrunk in the previous two quarters, causing the 19-nation bloc to suffer a double dip recession.

Growth neared 3% in Italy and Spain, whose economies were both badly damaged by the pandemic. Austria and Portugal rebounded even stronger, with the latter reporting a 4.9% expansion to its economy. Meanwhile, the two largest economies in the eurozone had less growth, with Germany seeing 1.5% and France 0.9%.

However, despite recent growth, the eurozone is still 3% down from its pre-pandemic level at the end of 2019.

Tourism benefits Portugal

At the moment, the statistics on growth are first estimates, so there is not much detail to show breakdown of recovery patterns.

However, evidence shows a major contribution to growth in France, Germany and mainly Spain was household spend. And a 29% surge in hotel and restaurant trade helped in France.

A chief Europe economist believes Portugal’s rebound may reflect “a slightly less disastrous tourism season than Spain’s”. He predicts “another strong number for eurozone GDP” in the second half of the year, which “would bring the economy close to, but below, its pre-pandemic level”.

In comparison, the US has closed that gap. Although employment in the US remains down, and economic activity is below where it would probably be if the pandemic had not happened.

Elsewhere, new figures show the number of unemployed people in the eurozone dropped by over 400,000 in June. However, it is still one million above the low hit at the beginning of last year.

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