National data available so far suggests that euro-zone GDP growth slowed from 0.6% q/q in Q1 to either 0.1% or 0.0% in Q2, in part due to the reversal of tariff front-running. (Our projection was 0.2%.) GDP contracted in Germany and Italy and was boosted by inventories in France, leaving Spain as the only genuinely good performer among the four largest economies. And with the 15% US universal tariff likely to subtract around 0.2% from the region’s GDP, growth is likely to remain weak in the rest of this year.
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