What the eurozone economy reported in the second quarter

The eurozone economy recorded better-than-expected growth of 0.1% in the second quarter compared with the previous three-month period, flash Eurostat data showed on Wednesday.

Economists polled by Reuters had expected eurozone growth to remain flat in the period, after 0.6% growth in the first quarter.

“The slowdown in eurozone GDP growth in the second quarter was not a surprise as the boost from the pre-tariff implementation waned,” Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said in a note.

“Overall, the data suggests that the euro area has been resilient to changes in US trade policy so far. The advance introduction of tariffs boosted the economy in the first quarter and the impact of trade policy uncertainty appears to be limited so far,” he added.

US tariffs and their impact have been a major concern for European economies so far this year. US President Donald Trump’s so-called reciprocal tariffs initially took effect in April at the start of the second quarter.

The tariffs were then temporarily reduced, but the past few months have been filled with great uncertainty as trade deal negotiations have been ongoing. Some higher sectoral tariffs have also been in place, including on cars, steel and aluminum.

Over the weekend, the European Union agreed to a trade framework with the United States that includes 15% tariffs imposed on the bloc. Some goods will be exempted and car taxes reduced to a baseline level.

European bond yields were little changed after the data was released, with both French and German 10-year bonds rising by less than one basis point.

The German economy is shrinking

Earlier on Wednesday, preliminary data from the statistics agency Destatis showed that output in the European Union’s largest economy, Germany, contracted slightly by 0.1% in the second quarter of 2025 compared to the previous three months.

The figure, which is adjusted for price, calendar and seasonal fluctuations, was in line with expectations among analysts polled by Reuters and marked a sharp slowdown compared with a revised 0.3% increase in the first quarter.

Investment in machinery and equipment, as well as in construction, was lower in the second quarter than in the previous three-month period, while private and government consumer spending increased.