The eurozone economy experienced stronger-than-expected growth in the second quarter of 2026, expanding by 0.4%, according to data released by the EU's statistics agency. This figure surpassed economists' predictions, which ranged from 0.1% to 0.2%. The resilience comes despite an energy shock from the ongoing US-Iran war, which began earlier in the year.
This growth marks a positive turnaround from the first quarter of 2026, which initially reported a 0.2% contraction but was later revised to zero growth. Andrew Kenningham, chief Europe economist for Capital Economics, noted that the continued steady growth indicates that households and businesses have maintained spending levels despite the conflict, suggesting the economy is weathering the war relatively well. Capital Economics estimated a 0.25% growth for the eurozone when excluding Ireland's volatile GDP data.
The European economy has shown surprising resilience due to several factors. The increase in global energy prices has been more modest than during the 2022 shock, especially for natural gas. Europe has also reduced its reliance on fossil fuels, increasing renewable energy generation and improving energy efficiency. Imports of oil by volume have decreased by about 10% and natural gas by nearly 15% compared to 2022, leading to a smaller drag on GDP from higher energy prices. Additionally, supportive fiscal policies, including energy support programs and increased defense spending, have helped cushion the impact.
