Europe’s economy posts 13% growth as recovery accelerates
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Europe’s economy posts 13% growth as recovery accelerates

European economies posted stronger than expected growth in the second quarter, with consumer and business confidence booming as Covid-19 restrictions were eased.

GDP across the European Union rose by 13.2% compared with the same period last year, and by 1.9% compared with the previous quarter, according to a preliminary estimate published Friday by the EU statistics office. The 19 EU countries that use the euro currency posted even stronger growth of 13.7% and 2% respectively, easily beating a Reuters forecast of 1.5%.

Unlike the United States, which posted second quarter annualized growth of 6.5% on Thursday, European GDP has yet to return to its pre-pandemic level.

Annual inflation across the euro economies also shot up, and could hit 2.2% in July, according to official EU statistics. That’s higher than the European Central Bank’s target of 2%.

Accelerating price increases were driven by rising energy costs (up 14% in July), food, alcohol and tobacco (up 1.6%) and services.

“The reopening of non-essential shops has seen retail sales leap back toward pre-pandemic levels, while there are signs that firms’ investment plans are rising, which bodes well for continued growth,” said Tej Parikh, a director at Fitch Ratings’ economics.

“The economic momentum from the reopening is building going into [the third quarter], but a rise in cases of the Delta variant across the eurozone may pose a downside risk.”

— This is a developing story and will be updated.

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