GDP growth accelerates in Q2

Economic momentum strengthens in Q2: A second release confirmed that GDP growth accelerated to 3.6% year on year in the second quarter, up from 3.0% in the first quarter. On a working-day and seasonally adjusted quarter-on-quarter basis, economic growth waned markedly to 0.5% in Q2, compared to the previous quarter's 1.3% growth.

Public spending and tourism underpin GDP growth: The improvement was driven by faster expansions in public spending and exports. Public consumption surged 11.2% in Q2 (Q1: +0.1% yoy). Less positively, private consumption growth fell to 2.4% in Q2 (Q1: +2.5% yoy). Meanwhile, fixed investment growth moderated to 18.3% in Q2, below the 20.4% rate recorded in the previous quarter. On the external front, exports of goods and services growth improved to 8.6% in Q2 (Q1: +6.8% yoy). The improvement was driven by a faster increase in services exports, as tourist arrivals strengthened in the quarter. Meanwhile, goods exports sank at a faster pace amid persistent trade turmoil. Lastly, imports of goods and services growth sped up to 7.2% in Q2 (Q1: +5.6% yoy).

Economic momentum to wane in 2025: The economy is seen growing at a slower pace in 2025 than in 2024, weighed down by cooling private spending growth. Still, it should remain among the fastest growing in the Euro area, driven by healthy tourist activity, a supportive fiscal stance and ECB monetary policy easing.

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