The euro zone recorded robust quarterly growth of 2% in the second quarter. The rebound reflected the impact of the lifting of restrictions across the bloc during April-June and was in line with what we were expecting. Consumer confidence and service sector activity picked up sharply, catching up with already resurgent manufacturing activity.
Most countries expanded at strong rates, but the German economy’s return to growth, at 1.5% quarter on quarter, was weaker than we expected. Supply-chain frictions, in particular shortages of semiconductors and microchips, mainly explains this underperformance.
Euro zone output remains below pre-pandemic levels and the full recovery will stretch into 2022. This contrasts with the US, where strong second-quarter growth pushed real GDP back above the level recorded in the fourth quarter of 2019.
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