Euro zone economy shows resilience as second-quarter GDP beats expectations, inflation slips

Euro zone inflation fell in July, and new growth figures showed economic activity picking up in the second quarter of this year — bringing some positive news to the region.

Headline inflation in the euro area was 5.3% in July, according to preliminary data released Monday, lower than the 5.5% registered in June. However, it remains well above the European Central Bank’s 2% target for the 20-member bloc.

The euro area has been battling high inflation for the past year, leading the ECB to undergo a full year of consecutive rate hikes in an effort to bring prices down. Last week, the central bank rose rates by a quarter percentage point once again, bringing its main interest rate to 3.75%.

The inflation figures come against a backdrop of previously moribund growth, with GDP (gross domestic product) stagnating in the first quarter of this year. However, a separate data release on Monday showed that growth accelerated in the second quarter, expanding by 0.3% — higher than the 0.2% expected.

Both France and Spain’s economies proved relatively resilient in the second quarter, with the former posting a GDP rate of 0.5% and the latter expanding by 0.4%.

Germany, however, proved weaker over the same three-month period, failing to post any growth.

This is a breaking news story and it is being updated.