Eurozone Defies Odds: 0.1% Q2 Growth Amid Global Trade Chaos

Europe's economic engine sputters—but refuses to stall. While trade wars and supply chain meltdowns dominate headlines, the Eurozone just posted a surprise 0.1% growth for Q2 2025.

The bare-knuckle fight for stability

Central bankers are white-knuckling their spreadsheets as manufacturing PMIs flirt with contraction territory. Yet consumer spending—fueled by that sweet, sweet pandemic savings overhang—kept the bloc barely in the black.

Meanwhile in Frankfurt...

ECB officials are probably popping €200 bottles of Riesling to celebrate not being the ones to trigger a recession this quarter. Traders, however, remain unimpressed—futures markets still price in three rate cuts before 2026.

Bottom line? The Eurozone's walking a tightrope without a net. And as any crypto degenerate knows: 0.1% moves might not move traditional markets, but they’re enough to make leveraged altcoin positions go *poof*.

Germany contracts, Spain and France outperform

Data from Destatis, released the same day, showed that Germany, the region’s largest economy, contracted 0.1% in Q2. That matched forecasts and marked a drop from its 0.3% expansion in Q1. Construction and industrial investment fell over the quarter, while consumer and public spending edged up. This weak showing is just the latest in a long string of poor performances for Germany, which has struggled to regain solid footing for over three years.

In contrast, France delivered 0.3% growth, outperforming the 0.1% expected. Spain, one of the eurozone’s more stable economies in recent years, clocked in at 0.7% growth, an increase from the 0.6% posted in the first quarter. That divergence highlights the growing imbalance across the region, as more industrial export-heavy economies like Germany face pressure, while others with stronger domestic demand show resilience.

“The return to growth [in Germany] and a strong economy remains a long and complicated project,” said Carsten Brzeski, global head of macro at ING. German Chancellor Friedrich Merz recently announced a plan to loosen the country’s borrowing limits to free up €1 trillion for investment. The idea is to jumpstart the economy after years of sluggish performance, but results could take time.

Tariffs and rate uncertainty weigh on outlook

With the trade fight dominating the backdrop, Riccardo Marcelli Fabiani of Oxford Economics said growth “suffered only a limited setback due to the payback from tariff frontloading.” He also warned that “this will make ECB policymakers more reluctant to cut.” Market expectations for another interest rate reduction this year have cooled. Traders now assign a 50-50 chance that the European Central Bank will deliver another quarter-point cut by October.

ECB President Christine Lagarde said the economy had done “slightly better than the central bank had expected so far this year,” calling the Eurozone’s position “a good place.” That comment came before the Q2 numbers dropped, but it gives a window into the ECB’s thinking as the year progresses.

The euro held steady at $1.155 after the data was published. French and German 10-year bond yields barely moved, both inching up by less than a basis point, showing little investor reaction in the fixed-income markets.

Ulrich Kater, chief economist at Deka Bank, pointed to Germany’s weak performance versus its peers. “As the dust of the tariff explosion gradually settles over the course of the year, it will become clear that economic momentum in Germany remains weak, especially in comparison with many European neighbours,” he said.

Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.