By Joshua Kirby
The eurozone economy slowed in the three months through June, but showed a resilience that suggests it could bounce back in the months ahead despite the higher tariffs its exports now face in the U.S.
Gross domestic product in the 20-nation currency union grew 0.1% over the quarter, European Union figures showed Wednesday. That marks a slowdown from the 0.6% growth the eurozone booked in the first quarter of the year, but is better than the slight contraction economists had forecast.
However, the eurozone economy avoided the contraction that was forecast by many economists, further evidence of the resilience displayed by the global economy during a time of great uncertainty about U.S. trade policy. Figures released earlier this month pointed to continued strong growth in China during the second quarter, while figures to be released later Wednesday are expected to show that the U.S. economy returned to growth after a first-quarter contraction.
The slowdown in eurozone output between the two quarters points to the effect of frontloading as U.S. firms rushed to stock up ahead of April's tariff announcement by President Trump, with a reverse effect in the months following that announcement. That was most significant in Ireland, home to the operations of several major U.S. drugmakers, which booked a decline in GDP in the three months through June.
But with EU leaders having reached a trade deal with the U.S., the eurozone economy could recover some momentum in the second half of the year. European companies now have a better--if not yet entirely clear--view of what duties to expect on their U.S. exports.
Meanwhile, real wages have risen as inflation falls in the eurozone, offering a fillip to consumer spending. Unemployment remains close to historic lows. And some parts of the service sector, immune to tariffs on goods, are booming, notably tourism; the numbers of foreign visitors to European countries recovered beyond prepandemic levels last year to hit close to 750 million.
Activity in Germany, Europe's most important economy, decreased by 0.1% over the quarter, reversing the growth of 0.3% booked in the first three months of the year, data from the country's statistics office showed Wednesday. Economic expansion earlier in the year was in part down to a boost to German factories as U.S. importers rushed to stock up ahead of April's tariff announcement.
The eurozone economy slowed in the three months through June, but showed a resilience that suggests it could recover in the months ahead despite the higher tariffs its exports now face in the U.S.
The Italian economy, also more exposed than some peers to trade tariffs, similarly shrank by 0.1%, the country's own statistics office said.
By contrast, the French economy picked up pace in the three months through June, increasing by 0.3% over the quarter. That marked an acceleration from 0.1% in the first three months of the year and beat economists' estimates for an unchanged rate of growth. Exports grew over the quarter, despite a rocky trade backdrop as the European Union faced an uncertain trade policy out of Washington.
The Spanish economy also performed better than expectations in the second quarter, gaining 0.7% despite signs that a recent tourism boom is beginning to lose momentum, figures showed earlier in the week.
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
(END) Dow Jones Newswires
07-30-25 0514ET
