Euro Zone Economy Nudges Upward on AI and Government Spending

The euro zone economy has shown modest growth in the second quarter of 2026, expanding by 0.4% after a 0.2% contraction in the previous quarter.

This growth was driven by surging investment in artificial intelligence, ample government spending, and several one-off factors that helped offset the drag from the war in Iran and soaring energy costs.

The economy grew slightly faster than modest expectations, with a 0.4% expansion on the quarter and a 1% acceleration compared to the same quarter last year.

Despite this growth, forecasters are still expecting full-year growth of less than 1% due to high energy costs and potential inflationary pressures.