• RankiaPro Spain
Menu
  • RankiaPro Spain
SUBSCRIBE
Search
Close
  • Home
  • Insights
    EQUITIES
    EQUITIES
    FIXED INCOME
    FIXED INCOME
    ESG
    ESG
    INTERVIEWS
    INTERVIEWS
    MARKET OUTLOOK
    MARKET OUTLOOK
    ETF
    ETF

    Featured

    COVER IMAGE WEB POSTS (4)
    Insights

    Regime change calls for style balance

  • News
    APPOINTMENTS
    APPOINTMENTS
    LAUNCHES
    LAUNCHES
    ASSET MANAGERS
    ASSET MANAGERS

    FEATURED

    COVER IMAGE WEB POSTS (5)
    Appointments

    DWS: Sebastian Krämer-Bach to take over Communications & Marketing from Adib Sisani

  • Magazine
    RANKIAPRO EUROPE
    RANKIAPRO EUROPE
    RANKIAPRO IBERIA
    RANKIAPRO IBERIA
  • Events
    RANKIA FUNDS EXPERIENCE
    CONFERENCE CALLS
    CONFERENCE CALLS
    RANKIAPRO MEETINGS
    RANKIAPRO MEETINGS
  • Podcast
  • MiFIDII Training
Menu
  • Home
  • Insights
    EQUITIES
    EQUITIES
    FIXED INCOME
    FIXED INCOME
    ESG
    ESG
    INTERVIEWS
    INTERVIEWS
    MARKET OUTLOOK
    MARKET OUTLOOK
    ETF
    ETF

    Featured

    COVER IMAGE WEB POSTS (4)
    Insights

    Regime change calls for style balance

  • News
    APPOINTMENTS
    APPOINTMENTS
    LAUNCHES
    LAUNCHES
    ASSET MANAGERS
    ASSET MANAGERS

    FEATURED

    COVER IMAGE WEB POSTS (5)
    Appointments

    DWS: Sebastian Krämer-Bach to take over Communications & Marketing from Adib Sisani

  • Magazine
    RANKIAPRO EUROPE
    RANKIAPRO EUROPE
    RANKIAPRO IBERIA
    RANKIAPRO IBERIA
  • Events
    RANKIA FUNDS EXPERIENCE
    CONFERENCE CALLS
    CONFERENCE CALLS
    RANKIAPRO MEETINGS
    RANKIAPRO MEETINGS
  • Podcast
  • MiFIDII Training
Search
Close
Search
Close

Home | Eurozone growth accelerates in Q2, as inflation continues to rise

Eurozone growth accelerates in Q2, as inflation continues to rise

Spain was the best performer, growing 1.1% after growth of just 0.2% in the previous quarter, and the main disappointment came from Germany.
Azad Zangana

Senior European Economist and Strategist

Schroders

  • 3 August 2022

While the latest GDP figures outperformed expectations, leading indicators suggest the economy has slowed dramatically in recent weeks, raising the risk of recession in the second half of the year.

Quarterly eurozone real GDP growth accelerated from 0.6% in the first quarter to 0.7% in the second quarter of the year, beating consensus expectations of a slowdown to 0.2% growth (Schroders forecast 0.6%). On a year-on year basis, GDP growth slowed from 5.4% to 4%, as the gains from the rebound post-lockdowns start to fade.

Amongst the larger member states, Spain, Italy and France all beat expectations, while Germany disappointed. Spain was the best performer, growing 1.1% after growth of just 0.2% in the previous quarter, although Italy was close behind with 1% growth compared to 0.1% at the start of the year. France rebounded from its 0.2% contraction in the first quarter to growth of 0.6% in the latest period.

The main disappointment came from Germany, as growth stalled compared to expectations of 0.1% growth. However, it is worth noting that German GDP growth for the first quarter was revised up from 0.2% to 0.8%, and so the underperformance compared to the previous data is not as bad as it appears.

As these are preliminary figures, there are few details of the drivers of growth. France, which does provide some details, saw growth coming from net exports, mostly driven by weaker imports. Domestic demand was flat overall, as household spending contracted yet again. It seems that higher inflation is reducing demand from households, which is hurting growth. But with inflation rising further, could this the last of the solid growth for the eurozone?

Inflation hits another record high

Meanwhile, monthly HICP inflation for the eurozone rose to 8.9% y/y in July based on the latest flash estimate. Headline inflation rose from 8.6% y/y in the previous month and was mainly driven by higher prices for processed food, alcohol and tobacco, along with services. Core inflation, which excludes energy, food, alcohol and tobacco rose from 3.7% to 4%.

The details of the report suggest that external factors, such as food and energy, continue to dominate the basket of goods and services with regards to higher inflation. However, the rise in services inflation does suggest that domestic pressures are also building. This is especially concerning as unemployment rates remain close to record lows, raising the prospects for higher wage settlements and a further rise in inflation pressures.

Moreover, concerns over the supply of natural gas from Russia has raised the cost of energy for this winter dramatically. Member states recently agreed to a voluntary 15% reduction in the consumption of gas, but this could become mandatory if supply continues to be disrupted. While energy inflation fell back from 42% y/y to 39.7% y/y in the latest reading, we expect further price increases to keep energy and headline inflation elevated in the second half of this year, which in turn will reduce the spending power of households.

Recession risks rising

While the latest GDP figures outperformed expectations, leading indicators suggest the economy has slowed dramatically in recent weeks. The S&P Global purchasing managers indices (PMIs) suggest activity is now falling, raising the risk of recession in the second half of the year.

We continue to expect reasonable growth for southern member states, which have not enjoyed a full tourism season since 2019. However, it’s clear from Germany’s performance that global capital investment has slowed in response to rising interest rates and concerns over growth. China’s draconian lockdowns have not helped matters either. With the heavy reliance on Russian gas to consider as well, it appears that the northern member states are particularly vulnerable going into the next two to three quarters.

  • Economic Growth, Eurozone, Growth, Inflation

Related Post

outside trees
  • Insights, Market Outlook

Pandemic, war and climate change sharpen focus on ESG

These insights and many more surfaced in Capital Group’s annual ESG global study published in May 2022.
Casa Blanca EE.UU. DESTACADA
  • Insights, Market Outlook

US inflation hits 9.1%, the highest figure in 40 years

Despite the actions of the US Federal Reserve, more forceful and swifter in its measures than its European counterpart.
Planta flor destacada
  • Insights

Contained EM inflation and higher real yields suggest relative value in local markets

Developed market central banks have spent the last decade struggling to bring inflation up to target, while emerging market central banks have mostly continued their long-term drive to bring inflation down.
NEWSLETTER
If you want to keep up to date with the latest news from the asset management industry and all our events, subscribe now to our newsletter.
Subscribe

Last Tweets

5 Aug

💼 @DWS_Group: Sebastian Krämer-Bach to take over Communications & Marketing from Adib Sisani

...https://en.rankiapro.com/dws-sebastian-kramer-bach-marketing/

5 Aug

🧐 Germany could go into recession

https://en.rankiapro.com/germany-recession/

5 Aug

📣 OPEC+ raises oil production by 100,000 barrels per day, the lowest increase in history

...https://en.rankiapro.com/opec-raises-oil-production/

4 Aug

💼 @PIMCO Hires @RichardClarida as Managing Director and Global Economic Advisor

...https://en.rankiapro.com/pimco-hires-richard-clarida/

RankiaPro

  • Home
  • Insights
  • News
  • Magazine
  • Events
  • About us
Menu
  • Home
  • Insights
  • News
  • Magazine
  • Events
  • About us

Terms and uses

  • Cookies Policy
  • Privacy Policy
  • Disclaimer
Menu
  • Cookies Policy
  • Privacy Policy
  • Disclaimer

Contact

  • Email: [email protected]
  • Phone: (+34) 963 386 976
  • Mobile: (+34) 640 308 023

Newsletter

If you want to keep up to date with the latest news from the asset management industry and all our events, subscribe now.

Subscribe

All rights reserved © 2003 – 2021 Rankia S.L.

RankiaPro

  • Home
  • Insights
  • News
  • Magazine
  • Events
  • About us
Menu
  • Home
  • Insights
  • News
  • Magazine
  • Events
  • About us

Terms and uses

  • Cookies Policy
  • Privacy Policy
  • Disclaimer
Menu
  • Cookies Policy
  • Privacy Policy
  • Disclaimer

Contact

  • Email: [email protected]
  • Phone: 963 386 976 – 601 302 692

All rights reserved © 2003 – 2021 Rankia S.L.

Manage Cookie Consent
To provide you the best experience on our website, we use technologies like our own and third-party cookies for analytical purposes and to store device information. Consenting to these technologies will allow us to process data such as browsing behaviour or unique identifiers on this site. Not consenting or withdrawing consent may adversely affect certain features and functions.

To learn more, please read our Cookie Policy and Privacy Statement.
Functionality or Personalisation Cookies Always active
These cookies are necessary for the website to function or for the unique purpose of transmitting a communication over an electronic communications network, and cannot be disabled on our systems. Usually they are set up to respond to actions made by you to receive services, such as adjusting your privacy preferences or filling out forms. You can set your browser to block or alert you to the presence of these cookies, but some parts of the website will not work. These cookies allow the website to provide better functionality and personalisation. They may be set by us or by third parties whose services we have added to our pages. If you do not allow these cookies some of our services will not work properly.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics Cookies
These cookies allow us to count traffic sources in order to measure and improve the performance of our website. Storage or technical access which is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing Cookies
These cookies may be site-wide, placed by our advertising partners. These third parties may use them to create a profile of your interests and show you relevant adverts on other sites. If you do not allow these cookies, you may receive less targeted advertising.
Manage options Manage services Manage vendors Read more about these purposes
Cookie Settings
{title} {title} {title}
  • RankiaPro Spain
Menu
  • RankiaPro Spain
Menu
  • Home
  • Insights
    • Equities
    • ESG
    • ETF
    • Fixed Income
    • Interviews
    • Market Outlook
  • News
    • Appointments
    • Asset Managers
    • Launches
  • Magazine
    • RankiaPro Europe
    • RankiaPro Iberia
  • Events
    • Rankia Funds Experience
    • Online Events
    • RankiaPro Meetings
  • Podcast
  • MIFIDII Training

Follow us on social media

Linkedin Twitter Youtube Flickr

NEWSLETTER

Subscribe

Book now

Eurozone growth accelerates in Q2, as inflation continues to rise