European economy grows 2%, ending double-dip recession

Frankfurt: Europe emerged from a double-dip recession in the second quarter with stronger than expected growth of 2% over the quarter before, according to official figures released Friday, as hard-hit southern European economies Spain, Italy and Portugal delivered surprisingly strong results.

But the economy in the 19 countries that use the euro currency still lagged pre-pandemic levels and trailed the faster recoveries in the US and China, with the delta variant continuing to cast a shadow of uncertainty over the upturn.

The growth figure for the April-June quarter announced Thursday by the European Union's statistics agency Eurostat compared to a drop of 0.3% in the first quarter as the 19 countries that use the euro endured a double-dip recession after a rebound in mid-2020. The second-quarter growth figure was stronger than the 1.5% foreseen by market analysts.

Italy was a major positive surprise, growing 2.7% and Portugal boomed with 4.9%, while growth returned in major economies France, which grew 0.9% compared to the previous quarter, and Germany, which saw growth of 1.5% after a sharp drop of 2.1% in the first quarter. German auto companies in particular have shown strong profits despite a shortage of semiconductor components as global auto markets recover, particularly for the higher-priced vehicles sold by Mercedes-Benz and by Volkswagen's Audi and Porsche luxury brands.

Yet the recovery lags the one in the US, where the economy surpassed its pre-pandemic level during the quarter. Friday's figures leave the eurozone 3% smaller than before the virus outbreak, according to Capital Economics. China was the only major economy to continue growing during pandemic year 2020.

The stronger performance in southern Europe may be the result of stronger spending by households, said Andrew Kenningham, chief Europe economist at Capital Economics. Spain, with consumer spending up 6.6%, both illustrated the rebound and underlined how far it has to go, since gross domestic product remains 6.8% below where it was before the pandemic. Lagging vaccinations held back the

European economy in the first part of the year but have made steady progress since.