• The euro zone recorded robust quarterly growth of 2% in the second quarter. The rebound reflected the impact of the lifting of restrictions across the bloc during April-June and was in line with what we were expecting. Consumer confidence and service sector activity picked up sharply, catching up with already resurgent manufacturing activity.

• Most countries expanded at strong rates, but the German economy’s return to growth, at 1.5% quarter on quarter, was weaker than we expected. Supply-chain frictions, in particular shortages of semiconductors and microchips, mainly explains this underperformance.

• Euro zone output remains below pre-pandemic levels and the full recovery will stretch into 2022. This contrasts with the US, where strong second-quarter growth pushed real GDP back above the level recorded in the fourth quarter of 2019.

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