Eurozone growth slows to 0.3% in Q2

Analysts surveyed by dpa-AFX had expected second-quarter growth would come in unchanged at 0.4 per cent.

In the first quarter of 2015, GDP grew by 0.4 percent in both eurozone and the EU.

This slowdown was due to declines in investment, inventories and consumer spending. The consensus forecast for the second quarter in a Reuters poll was for 0.5pc growth.

“The weaker than expected increase is largely attributable to France, where the economy has once again ground to a halt”, said Chris Williamson, chief economist at Markit, in a note.

Gross domestic product in the 19-nation region rose 0.3 percent, the European Union’s statistics office said on Friday.

So there’s growing speculation that official figures released Friday will show the 19-country bloc’s growth rate eased during the second quarter. Statisticians have also revised up their estimates for previous quarters, from minus 0.4% to minus 0.2% in the final three months of 2014, and from minus 0.2% to zero in the first quarter of 2015.

The euro fell sharply at the start of the year, shedding more than 8 percent on a trade-weighted basis between January and March – its weakest quarter ever (EUREER=ECBF).

“While the euro zone economy seems to see some signs of rebalancing, with the stagnation in France and strong growth numbers from Spain and Greece, Germany remains an nearly boring beacon of reliability”, ING economist Carsten Brzeski said.

With China jolting global markets by devaluing its currency and Greece on the verge of a new bailout program, the euro area’s nascent revival may yet struggle. Portugal grew by 0.4 percent, also falling short of an estimated 0.5 percent, Bloomberg reported.

“Of course, if China were to cause major contagion across emerging markets, growth in core Europe would suffer a little despite positive domestic fundamentals”, said Schmieding.

Over the past year or so, the euro has fallen to multiyear lows against the dollar.