According to preliminary estimates from Eurostat, the euro area economy continued to expand modestly in Q2 2025. Eurozone GDP grew by 0.1% quarter-on-quarter, slowing from +0.6% in Q1. Year-on-year, growth reached 1.4%. Across the European Union, growth was slightly higher at +0.2% quarter-on-quarter and +1.5% year-on-year. 

The strongest quarterly performance came from Romania (+1.2%), followed by Spain (+0.7%), Portugal (+0.6%), as well as Lithuania (+0.9%), Estonia, and the Czech Republic (each +0.5%). These countries show steady recovery, primarily driven by the services sector, consumer activity, and construction. 

By contrast, the region’s largest economies recorded weak or negative growth: Germany and Italy contracted by –0.1%, while France grew by +0.3% and the Netherlands by +0.1%. Ireland stands out with a –1.0% quarterly decline despite strong annual growth of +16.2%, likely linked to transfer pricing effects and the activities of multinational corporations. 

On an annual basis, growth remains supported in Lithuania (+3.0%), Spain (+2.8%), the Czech Republic (+2.4%), and the aforementioned Ireland. 

Eurostat concludes that growth across the EU remains positive but fragile, largely driven by services and construction, despite signs of recession in individual economies and ongoing geoeconomic uncertainty. These figures are preliminary and may be revised in subsequent releases. 

Comment from the Investment Division of M24 SunShine: 

The weak quarterly GDP growth in the euro area, amid contractions in Germany and Italy, signals a lack of structural resilience. The negative trend in Germany, traditionally the EU’s economic engine, is particularly concerning. If stagnation persists, it could put pressure on the entire eurozone. Growth in peripheral economies is not yet sufficient to offset core weakness, and reliance on services and construction makes the recovery vulnerable in the context of high interest rates.