Portugal and Spain Lead Eurozone Growth with Above-Average Performance in the Second Quarter

Portugal achieved economic growth of 1.1% and Spain 0.8% on a quarterly basis in the second quarter, outperforming the Eurozone average of 0.4%, confirming that Southern European economies are leading the European recovery.

Portugal and Spain relied on three main drivers to achieve these figures: incoming tourism revenues, which experienced an exceptional season, the acceleration of infrastructure investment, and labor markets that maintained relatively high employment levels.

This performance contrasts with the clear faltering in the French and German economies, both of which face structural challenges including high energy costs, weak industrial demand, and declining competitiveness in global markets.

Economists believe that the main driver behind Southern Europe's outperformance is the wave of European spending through the Recovery Fund, as Portugal and Spain benefited from high funding ratios that constitute a structural pillar transcending regular economic cycles.

What do these terms mean?

Quarterly Gross Domestic Product: The economic growth rate compared to the previous quarter, used to paint an accurate picture of current economic momentum regardless of seasonal influences.

European Recovery Fund: A program launched by the European Union following the COVID pandemic to distribute hundreds of billions of euros to member states aiming to support recovery and digital and green transitions.

Resilient Labor Markets: Economies that maintain high employment levels despite economic shocks, thanks to flexible labor policies and companies' ability to adapt quickly.