Eurozone economy grows 0.4% despite Middle East war

The eurozone economy grew 0.4 percent in the second quarter of 2026, Eurostat said Thursday, as the currency area continued to expand despite pressure linked to the Middle East war.

The EU statistics agency said the 21-country single currency area had recorded zero growth in the first three months of 2026. That was a second revision from a 0.2 percent contraction reported in revised data in June.

The second-quarter figure was above the 0.2 percent predicted by economists for Bloomberg and the 0.1 percent forecast by analysts for FactSet.

Andrew Kenningham, chief Europe economist for Capital Economics, said the figures showed households and businesses had not cut spending much because of the Iran war. He said the consultancy expected steady growth to continue in the second half of the year.

Ireland helped lift the eurozone figure, recording 3.9 percent growth in the second quarter after a 7.0 percent contraction in the first three months of the year. The large swings are not tied to underlying economic activity but to accounting operations by multinationals, including pharmaceutical and technology companies, that use Ireland as their European base.

Capital Economics estimated that eurozone growth was 0.25 percent if Ireland was excluded.

The consultancy also pointed to GDP growth in Germany, France and Italy. Germany, Europe's biggest economy, grew 0.2 percent in the second quarter after 0.4 percent growth in the first quarter.

The European Central Bank last month cut its eurozone growth projection for 2026 to 0.8 percent from 0.9 percent.