Spain and Italy have helped drive the eurozone out of recession. This comes after a stronger than expected 2% expansion in the second quarter of 2021.
Germany’s economy grew by only 1.5% after a computer chip shortage hit manufacturing.
The single currency area beat forecasts of a 1.5% increase in GDP despite Germany’s disappointing performance.
Second quarter growth follows declines
The eurozone grew at an annual rate of 13.7% in the April to June period, figures from Eurostat showed. This year’s positive performance is in stark contrast to the same period in 2020.
Growth in the second quarter of 2021 followed declines of 0.6% in the final three months of 2020 and a further 0.3% drop in the first quarter of this year. These were the result of fresh covid waves.
Germany’s expected growth of 2% in the second quarter was affected by supply chains due to a computer chip shortage.
Spain recovers with 2.8% growth
However, Italy and Spain – the third and fourth largest economies in the eurozone grew faster than expected.
Spain recovered from a 0.4% decline in first-quarter output to record growth of 2.8% in the three months to June. Italy’s results were not far behind with a 2.7% expansion, double what the 1.3% analysts anticipated.
France had the weakest growth of the top four eurozone economies registering only 0.9% growth between April and June.
Higher energy prices contribute to inflation
Eurostat said higher energy prices caused eurozone inflation to rise from 1.9% in June to 2.2% in July.
This was slightly above the European Central Bank’s 2% target rate.