Inflation declines in the second quarter, boosting Eurozone growth
Activity went up by 0.3% between April and June, while prices went up by 5.3% in July.
After months of staying the same, Europe's economy has grown slowly. On Monday, the EU statistics office Eurostat reported that the euro currency countries grew by 0.3% between April and June 2023.
Even though it's a slight improvement from the first quarter, when there was no growth, it's still not growing as fast as before the oil crisis and Russia's full-scale invasion of Ukraine.
The last few months have predicted that the economy will improve so that the European economy will pick up more speed in the spring.
The numbers are the same as the European Central Bank (ECB) thought in June.
In the last few days, when the national statistics institutes of the four largest economies in the euro area came out, there was less doubt about the ECB's predictions.
Spain grew by 0.4%, France by 0.5%, Germany didn't change when it came out of decline (it stayed at 0%), and Italy went backwards by 0.3%.
France and Spain were the two main driving forces. The French number went up because they sent out a cruise ship, which is a vast manufactured item. This statistics quirk made France's growth look better, but it didn't do much to hide the fact that the second-largest economy in the eurozone had low demand for goods.
Ireland's 3.3% growth rate, the highest in the eurozone, also messed up the big picture.
Because tech giants like Meta, Google, and Apple have offices on the Emerald Isle, the growth numbers for the country are often very volatile.
Franziska Palmas, a senior Europe economist at Capital Economics, told the AP that if not for Ireland, growth in the euro area would have been only 0.1%.
In the meantime, inflation in the eurozone kept going down slowly, dropping from 5.5% in June to 5.3% in July. The 2% goal the European Central Bank (ECB) set is still a long way from these numbers.
The ECB has yet to choose whether it will keep raising interest rates.
Christine Lagarde, the head of the institution, told the French newspaper, Le Figaro, "There may be another interest rate hike in September, or there may be a break."
Even though the tool is used to fight inflation, it makes it more expensive for households and companies to borrow, invest, and spend.
Europe is still feeling the effects of Russia's invasion of Ukraine. For example, Moscow cut off most of its natural gas to the continent, which caused prices for fuel and energy to go up sharply.
Prices have increased the most but are still higher than before the war. Energy is no longer a major cause of inflation, but prices still increase when Europeans buy food, clothes, and other things.
In July, food prices were 10.8% higher than a year before; this was better than in June and the months back, but it was still a burden for European families.
On the other hand, the energy kept going down, falling 6.1%. After removing the effects of fluctuating food and energy costs, the core inflation rate remained at 5.5%. This crucial measure has yet to go down as much as central bankers would like.
But the second part of the year could be bad for the eurozone. Recent studies show that Germany is taking its time to get going, and many leading signs, like surveys, point to a weakening.