Euro Area GDP Growth Confirmed at 0.1% in Q2

Eurozone economic growth was confirmed at 0.1% in the first quarter of 2026, marking the weakest expansion since Q2 2025, reflecting pressure from tight energy supplies after the Middle East conflict disrupted flows of oil, its byproducts, and liquefied natural gas. Inflationary risks from these shortages have prompted ECB policymakers to consider further rate hikes this year, while the bloc’s largest economies have revised their growth forecasts downward. Among the Eurozone’s biggest economies, France’s economy stalled, while the Netherlands and Italy grew by 0.1% and 0.2%, respectively. Germany saw a slight acceleration, with GDP expanding by 0.3%, and Spain led with a 0.6% increase. On an annual basis, GDP growth slowed to 0.8% in Q1, down from 1.3% in the previous quarter.

The Eurozone GDP expanded by 0.1% from the previous quarter in the first quarter of 2026, missing the market consensus of a 0.2% expansion, and slowing from the 0.2% increase from the earlier period, according to the first preliminary estimate. The data reflected pressure from the tight supply of energy that is essential for major economies in the currency bloc, after the outbreak of war in the Middle East halted flows of oil, its byproducts, and liquified natural gas. Inflationary pressure from shortage risks drove ECB policymakers to consider higher rates this year and its largest members to revise growth downwards. French GDP projections were trimmed and its Q1 GDP unexpectedly stalled (vs 0.2% in Q4), while Italy (0.2% vs 0.3%) revised its projection lower and hinted it may not meet its fiscal projections despite. In turn, the German GDP expanded faster (0.3% vs 0.2%) amid infrastructure and defense deficit spending. Slower output was also seen from the Netherlands (0.1% vs 0.4%).

The Euro Area economy grew by 0.2% in Q4 2025, below earlier estimates of 0.3% and down from 0.3% in Q3, highlighting modest momentum despite easing inflation, lower interest rates, and resilience amid headwinds from US trade tariffs on EU imports. Household consumption rose 0.4%, up from 0.2% in Q3, while growth slowed for fixed investment (0.6% vs 1.3%) and public spending (0.5% vs 0.7%). Both inventory changes and net trade subtracted 0.1 percentage points each from GDP growth. Among major economies, Spain led with 0.8% growth, driven by strong household consumption and investment, followed by the Netherlands at 0.5%. Germany and Italy each grew 0.3%, while France lagged at 0.2%. On an annual basis, Eurozone GDP expanded 1.2% in Q4, slightly below the preliminary 1.3% and down from 1.4% in Q3. For full-year 2025, growth reached 1.4%, just below earlier estimates of 1.5% but accelerating from 0.9% in 2024.