Eurozone rebounds as restrictions ease

Brussels: The eurozone economy rebounded by a strong two percent in the second quarter, according to official data released on Friday, as reopened businesses lifted activity out of the pandemic doldrums.

The expansion in Europe was stronger than in the United States, where the economy grew by 1.6 percent compared to the previous quarter and China, which saw a 1.3 percent expansion in the period.

Some of the biggest rates of growth were seen in Italy and Spain, the countries worst hit by the first wave of the covid-19 crisis. Portugal posted a stellar increase of 4.9 percent.

"The eurozone economy continues to perform like a diesel engine: it takes a while to get going but don´t underestimate it once it´s picked up steam," said Bert Colijn, Senior Economist at ING bank.

Growth in Germany, the EU´s biggest economy, however disappointed at 1.5 percent while France renewed with solid growth after a period of stagnation in the winter.

As an automaking powerhouse, "Germany suffers much more severely from international shortages, because it is much more dependent on imported inputs from Southeast Asia, from China," said Selin Ozyurt, economist at credit insurance firm Euler Hermes.

The 19 countries that use the euro are still trying to catch up the ground lost during the Covid-19 pandemic in which its economy suffered the most in the developed world.

"Germany should reach that benchmark in the second half of the year, but we don´t expect the southern economies to do so until well into 2022," warned Andrew Kenningham, Chief Economist at Capital Economics.

All eyes are now on whether the momentum can hold, with the Delta variant of the virus seeing countries consider new orders to limit activity that could put a brake on the economy´s growth dynamic.

Eurostat, the EU´s official data agency, also said that inflation rose to 2.2 percent, above the European Central Bank´s target of near, but below, two percent.