Europe’s economy is growing again

London: The euro area economy is growing again, but may struggle to maintain the momentum for the rest of the year, CNN reported.

Gross domestic product across the 20 countries that share the euro currency rose by 0.3 per cent in the second quarter, compared with the previous three months, according to an official estimate published Monday.

GDP had fallen by 0.1 per cent in the last three months of 2022, and stagnated in the first quarter of this year, CNN reported.

Separately, official data showed that the overall rate of inflation continued to fall this month. The consumer price index for the euro area rose by 5.3 per cent, down from 5.5 per cent in June.

But core inflation — which strips out volatile food and energy costs — was unchanged at 5.5 per cent in July. And inflation for services and unprocessed food ticked up to 5.6 per cent and 9.2 per cent respectively.

Despite the encouraging economic data, there are signs that the region could be heading towards stagnation for the rest of the year.

“Today’s data broadly validates our near-term outlook, which anticipates very weak growth in H2, and a summer moderation in the pace of disinflation followed by a relatively sharp fall in Q4,” analysts at Oxford Economics wrote in a note on Monday.

The euro area economy was hit hard last winter by the huge increase in energy prices that followed Russia’s invasion of Ukraine — but data from Europe’s two biggest economies on Friday had signaled that a recovery was underway, CNN reported.

“Digesting the Putin shock of high energy and food prices, the eurozone economy has regained a little momentum in the last few months,” analysts at Berenberg said in a research note on Monday. “Like the US, the eurozone has so far weathered the recent challenges better than expected,” they added, CNN reported.