Eurozone: Glass half full or half empty?

Eurozone GDP growth slowed in the second quarter of the year, to 0.1% q/q from 0.6% q/q in the previous quarter. The slowdown was expected as the strong start of the year was partly driven by frontloaded sales to the US and tariffs kicked in early April. Survey data available so far suggest a slight improvement in activity at the start of Q3. But we caution against too much optimism and forecast about stagnation in 25H2. Tariffs will continue to bite, despite the framework for a deal reached between the EU and US. The EU has provisionally agreed to a 15% US tariff on most EU goods, promising to not hike rates on US goods in return, and to spend heavily in the US. The deal prevents worse, but will still hurt the Eurozone economy.