Eurozone Economy Defies Energy Shocks with Strong Q2 Growth

The eurozone economy has shown resilience in the face of energy shocks and uncertainty. According to data, GDP grew by 0.5% in the second quarter, a surprisingly strong performance despite ongoing challenges.

The European Central Bank is likely to raise interest rates in September due to inflation expectations remaining above 3% until spring 2027. This move would be on top of an existing increase, which cannot be ruled out.

Government bond spreads have widened, driven by deteriorating public finances in several countries, implicitly tightening financial conditions and partly doing the ECB's job.