Eurozone slows amid Brexit worries

The headquarters of the European Central Bank in Frankfurt am Main, on July 21, 2016.
The headquarters of the European Central Bank in Frankfurt am Main, on July 21, 2016.PHOTO: AFP

BRUSSELS (AFP) - Growth in the eurozone slowed in the second quarter to 0.3 per cent, official data showed on Friday, with analysts warning that the consequences of Brexit could harm the economy further later in the year.

The Eurostat statistics agency said economic growth in the 19-nation single currency bloc halved in the April to June period from a far more robust expansion of 0.6 per cent in the previous quarter.

The rate was in line with forecasts of analysts surveyed by data company Factset, and meant the eurozone grew by 1.6 per cent over 12 months.

The period covered by the gross domestic product (GDP) data largely pre-dates the shock vote in late June by non-euro Britain, which the European Central Bank warned last week would negatively influence growth in Europe for years to come.

Signals so far are that economic activity in the eurozone is proving resilient despite the vote after strong initial shocks rocked the financial markets.

"With the Brexit risk materialising on June 23, the eurozone growth outlook has weakened," said Florian Hense, economist at Berenberg Bank in anticipation of the growth data. But "so far... risks to the outlook look less tilted to the downside than before," he added.

In the eurozone, Spain managed to grow a solid 0.7 per cent despite being stuck in political deadlock since inconclusive elections last December.

But French growth ground to a halt in the April-June period, a disappointing result for the eurozone's second-biggest economy.

Eurostat also announced that eurozone consumer prices rose 0.2 per cent in July after a gain of 0.1 per cent in June as the single currency bloc edged further away from the dangers of deflation.

Eurozone unemployment meanwhile was unchanged at 10.1 per cent in June compared with May, but down from 11 per cent in June 2015, Eurostat said.

The agency said GDP growth for the EU's 28 member states as a whole stood at 0.4 per cent, for a year-on-year gain of 1.8 per cent.