The euro area recovered at a faster-than-estimated pace in the second quarter from the Covid-driven downturn, revised data from Eurostat showed on Tuesday.
Gross domestic product grew 2.2 per cent sequentially in the second quarter, more than the initial estimate of 2.0 per cent. The growth reversed the 0.3-per-cent fall in the first quarter and the 0.4-per-cent drop in the fourth quarter of 2020.
Year-on-year, GDP expanded 14.3 per cent instead of the prior estimate of 13.6 per cent. This follows a 1.2-per-cent decline in the first quarter.
With revised data showing that the eurozone economy performed even better than previously thought in the second quarter, the European Central Bank (ECB) is sure to revise up its GDP forecasts on Thursday, Capital Economics’ economist, Jack Allen-Reynolds, said.
That said, even if it reduces the pace of its PEPP purchases slightly, the ECB will stress that very loose monetary policy is still required, the economist added.
The expenditure-side breakdown today showed that household and government spending and gross fixed capital formation contributed positively to GDP growth.
The contribution from the external balance was close to neutral, while the contribution from changes in inventories was slightly negative.
Household spending increased 3.7 per cent, after a 2.1-per-cent drop in the previous quarter. Likewise, government final consumption expenditure climbed 1.2 per cent, in contrast to the 0.5-per-cent fall in the previous quarter.
Gross fixed capital formation expanded 1.1 per cent, reversing a 0.2-per-cent fall. Exports climbed 2.2 per cent after rising 0.7 per cent in the first quarter. Similarly, growth in imports accelerated to 2.3 per cent, from 0.4 per cent.
Further, data showed that employment grew 0.7 per cent sequentially in the second quarter, taking annual growth to 1.8 per cent. In relation to the Covid-19 pandemic, productivity based on persons increased compared to the same quarter of the previous year with 12.2 per cent for the euro area.
Based on hours worked, productivity compared to the same quarter of the previous year decreased 1.5 per cent for the euro area.