Economic growth in the eurozone slowed significantly in the second quarter of 2025, with gross domestic product (GDP) rising just 0.1% compared to the 0.6% expansion recorded in the first quarter, according to preliminary data released on Wednesday. The broader European Union (EU) economy fared slightly better, growing 0.2% over the same period.
The flash estimate from Eurostat reflects a loss of momentum across the bloc, driven in part by contractions in Germany and Italy — the eurozone’s first and third largest economies, respectively. In contrast, Spain emerged as a bright spot, leading growth with a 0.7% expansion, while France posted a better-than-expected 0.3% increase.
Despite narrowly beating economists’ forecasts of flat growth, the latest figures underscore the eurozone’s uneven recovery. Year-on-year, the eurozone grew 1.4%, while the EU expanded by 1.5% — both slightly below previous trends.
“Although the slowdown is to a large extent a by-product of a misleadingly healthy Q1 number, broad-based weakness across national data indicates that the economy lacks momentum, with only a handful of countries blowing into its sails,” said Riccardo Marcelli Fabiani, senior economist at Oxford Economics.
Diverging Fortunes Across the Bloc
Spain’s performance stood out, buoyed by strong consumer spending, business investment, and exports. Portugal and Estonia also registered solid gains, with GDP growth of 0.6% and 0.5%, respectively.
Germany’s economy, however, slipped into a 0.1% contraction — its first since mid-2024 — dragged down by weak investment in machinery and construction. Italy mirrored that trend, also shrinking 0.1% after growing 0.3% in the previous quarter, marking its first quarterly contraction in two years.
France delivered a modest surprise, growing 0.3% thanks to stockbuilding and improved domestic demand. However, Oxford Economics warned that the data may exaggerate the underlying strength, noting that both domestic consumption and trade made negative contributions to GDP.
Markets React Calmly Amid Broader Developments
Despite the mixed economic data, eurozone financial markets remained stable. Investors were largely focused on developments surrounding the recent US-EU trade deal, which analysts believe favours Washington.
The euro held steady at $1.1550, recovering from recent losses, while major stock indices posted minimal changes. The EURO STOXX 50 rose 0.1%, and the broader EURO STOXX 600 was flat.
In corporate news, French consumer brands Danone and L’Oréal gained 6.7% and 4%, respectively, on strong earnings. Conversely, Adidas tumbled over 6% after a disappointing revenue report and profit warning, and Mercedes-Benz Group slipped 1% on a sharp drop in first-half profits.
Germany’s DAX index was flat at 24,200 points, while Italy’s FTSE MIB rose 0.3% to 41,350 — its highest level since July 2007.
