Eurozone growth hits a low as Germany contracts and Spain shines

In the second quarter of 2025, the Eurozone experienced a significant slowdown in economic growth, with GDP rising only 0.1%, a stark decrease from the 0.6% increase seen in the first quarter. The growth across the European Union was slightly better at 0.2%, yet still reflected a downward trend compared to earlier in the year. Notably, Spain led the charge with a 0.7% growth rate propelled by strong consumer spending and rising exports, demonstrating its robust economic dynamism amid the overall decline in the Eurozone. On the contrary, Germany and Italy faced contractions, contributing negatively to the overall Eurozone performance. Germany's economy had its first contraction since mid-2024, suffering from weak domestic demand and soft industrial activity, which further exacerbated the slowdown in the Eurozone economy. This marked a concerning trend for Germany, particularly as it is one of the leading economies in Europe. Interestingly, despite the general slowdown, France managed to surprise economists with a GDP growth of 0.3%. This growth was attributed to increased domestic demand, indicating that not all countries within the Eurozone were negatively impacted to the same extent. The situation varied significantly across the continent and highlighted the economic disparity among member countries. Analysts, including senior economist Riccardo Marcelli Fabiani from Oxford Economics, noted that the slowdown could largely be attributed to a misinterpretation of the earlier strong Q1 results. The lack of cohesive momentum across the economy raises concerns about the sustainability of growth moving forward, especially as only a few countries appear to be driving any significant movement in a largely stagnant environment.