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Eurostat revised euro zone GDP growth for the second quarter to 0.6 percent from a preliminary 0.4 percent estimate, marking the strongest quarterly pace in over a year. The upgrade was largely driven by a 10.2 percent jump in Irish GDP, reflecting heavy multinational activity. Underlying demand remained weak, with Irish modified domestic demand shrinking 0.8 percent. Despite concerns over elevated oil prices and borrowing costs, Europe’s outlook is improving due to higher spending on defence and infrastructure alongside AI investments. Germany shows signs of recovery. The data is the last major input for the European Central Bank ahead of its rate decision, with investors expecting a quarter-point rate hike.
Expansion in euro area increases 0.6 per cent, up from a preliminary estimate of 0.4 per cent, Eurostat says Medical bottles and syringe are seen with Eli Lilly and Company logo displayed on a screen.
The euro zone economy expanded by more than originally estimated in the second quarter on the back of a sharp upward in Irish GDP , according to Eurostat. Euro zone GDP increased 0.6 per cent, up from a preliminary estimate of 0.4 per cent, the agency said on Monday.
This was the strongest quarterly pace in more than a year and comes after growth across the bloc stagnated in the first quarter of 2026. The better-than-anticipated reading comes on the back a 10.2 per cent jump in GDP in Ireland in second quarter, up from a previous estimate of 3.9 per cent.
Missing details on personal investment accounts leave consumers in the darkThe expansion was driven by a 22 per cent spike in output from the multinational-dominated “industry” sector here which includes big pharma groups such asIrish GDP is susceptible to large quarterly revisions because of the large multinationals using Ireland as a base for exports and economists view it as an unreliable metric. Modified domestic demand , seen as a better measure of underlying activity here, shrank by 0.8 per cent in the second quarter.at a three-year high due to the Iran war and borrowing costs rising, the outlook is looking rosier for Europe as governments spend big on defence and infrastructure, and companies invest in artificial intelligence.
Germany, the region’s largest economy, appears to be leaving behind a years-long malaise. Eurostat’s data are the last major input for the European Central Bank before it sets interest rates on Thursday. Investors are betting on a quarter-point increase, a move officials will be more confident about knowing growth in the 21-nation economy is robust.
Analysts including Bantleon’s Daniel Hartmann now expect expansion of more than 1 per cent this year, well above the 0.8 per cent predicted by the European Central Bank in June. Economists at JPMorgan, BNP Paribas and Societe Generale are among those who have recently added a hike by the ECB at year-end to their outlooks.
Enrique Diaz-Alvarez, chief economist at global financial services firm Ebury, said: “Growth momentum indicators like the PMIs continue to paint a picture of economic resilience in the euro area that, together with core inflation still running above target and the Iran war dragging on without a clear ending in sight, gives the ECB sufficient justification to keep raising rates. ” “A 25 basis point hike from the governing council this week is fully priced in by swap markets, so anything less would be not just a major shock but a big disappointment for investors.
,” he said.
“The more important question for currency markets is whether there is any pushback against expectations for a 3 per cent terminal rate in 2027,” he said. – Additional reporting by BloombergHigh Court hearing to sanction Bawag takeover of PTSB set for October 27thIreland’s financial literacy drive may have another pay-off: less crimeData centres to be offered cut-price gas under new proposalBudget 2027 unlikely to see return of energy credits, says Taoiseach
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