The delivery of the world’s second-largest cruise ship lifted France’s economy in the second quarter, according to official data that also showed Germany heading into a recession.
Built in Saint-Nazaire for the cruise ship operator Royal Caribbean, the Utopia of the Seas added €1bn (£840m) to French economic output, helping to increase trade growth to 0.6% in the three months to the end of June and gross domestic product to 0.3%.
The eurozone grew by 0.3% in the third quarter after a revised rate of 0.3% in the first, prompting many analysts to say that the 20-member euro bloc has turned a corner after flirting with recession in 2023.
Spain powered ahead with a 0.8% growth rate in the second quarter, while Italy’s recovery was maintained by a 0.2% rise in GDP.
Germany, the largest eurozone economy, slid back into contraction, recording a 0.1% fall in output.
Pushpin Singh, a senior economist at the Centre for Economics and Business Research consultancy, said the eurozone growth rate was better than expected by City analysts and “suggests the bloc has turned a corner since the start of the year”.
He added: “Prospects are likely to improve further throughout the year, driven by recent policy loosening by the European Central Bank and expectations for further interest rate cuts down the line.”
Bert Colijn, a senior economist at the Dutch bank ING, was more concerned that German growth would become a significant drag on the eurozone.
“Germany remains the weak link in this post-pandemic economy but the rest is not fantastic either.
“Leave out Spain and you just have an economy that moves along at a lacklustre growth pace.”
France’s economy grew marginally faster than expected and could improve again in the third quarter if the Olympics spur consumer spending, dispelling concerns that deadlock in the French parliament after recent elections would knock the economy off course.
The French finance minister, Bruno Le Maire, said the economy’s performance in the second quarter and the Paris Games meant growth this year would probably exceed the outgoing government’s 1% forecast.
“We will probably have growth after all that is better than the 1% forecast in February,” Le Maire said. “For two years, France has outperformed; our economic policies work and are giving tangible results.”
He added that the better than expected growth could be positive for the strained budget deficit and France needed to stay focused on reducing spending.
Anja Sabine Heimann, an economist at HSBC Germany, said industrial orders were weak and German consumers were reluctant to spend, adding that the risks of a recession were “elevated”.
The country has suffered almost zero growth over the past two years and avoided a recession only by a whisker.
Heimann said many of the ingredients of a slowdown were now in place.
“Domestic and foreign industrial orders continue to trend downwards – highlighting little support from industry in the near-term,” she added.
“With consumer prices nearly one-fifth above 2019 levels, even after recent strong nominal wage growth, German households have not yet recouped their spending power.
“Consequently, their spending scope is still somewhat constrained and there is unlikely going to be a large consumer spending spree.”
