Tue. May 24th, 2022

Europe emerged from a double-dip recession in the second quarter with stronger than expected growth of 2.0 percent over the quarter before, according to official figures released Friday, as restrictions eased, consumers started spending built-up savings and major companies showed stronger 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 U.S. 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 by the European Union’s statistics agency Eurostat compared to a drop of 0.3 percent 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 percent foreseen by market analysts.

Much of the improvement came from southern European countries earlier hit hard by large outbreaks and loss of tourism.

Italy, which saw 128,000 pandemic deaths and a deep recession, was a major positive surprise, growing 2.7 percent as consumer spending revived. Portugal boomed with 4.9 percent.

Meanwhile growth returned in major economy Germany, which saw growth of 1.5 percent after a sharp drop of 2.1 percent 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.

In another sign of rebounding activity, European plane maker Airbus this week raised its outlook for deliveries this year.

Yet the recovery lags the one in the U.S., 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 households increasing their spending as restrictions are eased, said Andrew Kenningham, chief Europe economist at Capital Economics.

Spain, with growth of 2.8 percent and consumer outlays up 6.6 percent, illustrated the rebound as well as underlining how far it has to go. Gross domestic product there remains 6.8 percent below where it was before the pandemic.

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