The euro zone economy grew more than expected in the second quarter of 2026, according to revised data published today, as the bloc appears to be weathering the energy shock from the Iran war better than feared.
The EU’s statistics agency said GDP in the 21-country euro zone expanded by 0.6% between April and June, up from the 0.4% previously estimated.
The single currency area recorded zero growth in the first three months of 2026.
The revision was largely due to Ireland recording growth of 10.2% in the second quarter, well above the July estimate of 3.9%.
Large swings in Ireland are not tied to underlying economic activity but are purely the result of accounting operations by multinationals, including major pharmaceutical companies and tech giants, that have chosen the country as their European base to benefit from its low corporate taxes.
Europe’s biggest economy, Germany, also saw revised figures, with higher growth of 0.3% between April and June after a previous estimate of 0.2%.
But inflation jumped to a three-year high of 3.3% in August, well above the European Central Bank’s 2% target.
The ECB is expected to raise interest rates again when it meets Thursday as renewed fighting in the Middle East pushes up energy costs.
Figures from the Central Statistics Office last week showed that Ireland’s domestic economy fell 0.8% quarter-on-quarter from April to June, though growth for the previous three months was revised higher, while the more volatile gross domestic product rose 10.2%.
With Ireland’s large multinational sector often distorting GDP, officials prefer to use modified domestic demand (MDD) to gauge the strength of the economy.
MDD growth for the first quarter was revised up to 1.7% from 0.3%.
GDP jumped 12.3% in 2025 due to a surge in pharmaceutical exports to the US ahead of threatened tariffs, before falling by 7.8% in the first three months of 2026 as the tariff-related stockpiling unwound.
The 10.2% quarter-on-quarter rise from April to June compared with an initial estimate of 3.9%, which had already helped boost the average across the euro zone.
Some analysts prefer to exclude Ireland when studying underlying trends in the bloc.
