Euro area GDP – Private consumption trumps the US tariffs

The euro area economy grew by 0.1% in the second quarter compared with the first quarter – slightly more than expected.

Dr Vincent Stamer

Commerzbank Economic Research

07/30/2025

Although US President Trump's tariffs have probably weighed on exports from the euro area countries, stronger private demand has more than offset this. The euro area economy is likely to continue growing moderately in the coming quarters. The surprisingly strong growth in the second quarter is likely to be another nail in the coffin for further rate cuts by the ECB.

Real gross domestic product in the euro area rose seasonally adjusted by 0.1% in the second quarter compared with the first quarter. This is significantly less than in the first quarter (0.6%). However, economists surveyed in advance had only expected stagnation for the second quarter. Moreover, excluding Ireland, which is prone to fluctuations, growth is likely to be slightly higher at 0.2%.

A look at individual countries however reveals diverging trends: Spain (0.7% vs. 0.6% consensus) and France (0.3% vs. 0.1% consensus) exceeded economists' expectations. As expected, German gross domestic product fell by 0.1%. Italian GDP remained below expectations at -0.1%.

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