Euro area growth beat expectations at 0.4% in the second quarter of 2026 while July inflation edged back up to 2.9%

Eurostat's flash estimate, reported on Saturday 1 August 2026, shows euro area gross domestic product rose 0.4 percent in the second quarter of 2026 from the previous quarter, above the 0.2 percent economists had expected and better than the flat reading of the first quarter. Across the European Union the rate rose from 0.1 percent to 0.5 percent. Annual growth also accelerated, to 1 percent in the euro area and 1.2 percent across the EU.

Country performance was markedly uneven. Ireland posted the strongest quarterly growth at 3.9 percent and on its own added 0.1 percentage point to the bloc's growth, followed by Lithuania at 1.7 percent and Sweden at 1.4 percent. Spain grew 0.7 percent and Portugal 0.8 percent, while Belgium and Austria recorded no growth at all. Germany expanded 0.2 percent, down from 0.4 percent the previous quarter, with France and Italy each growing 0.2 percent.

Price pressure has meanwhile returned. Eurostat's flash estimate puts euro area annual consumer inflation at 2.9 percent in July, up from 2.8 percent in June, with core inflation rising from 2.4 to 2.5 percent. Energy recorded the largest annual jump at 10 percent. Claus Vistesen of Pantheon Macroeconomics said the euro area economy outperformed forecasts despite the energy price shock caused by the US war against Iran.