The yoy dynamics reveal that domestic demand has been slowing. Consumption growth decelerated from 4.1% in 1Q to 3.3% in 2Q. Investment activity no longer increases at a double-digit rate, and it eased from 10.3% in 1Q to 7.8% in 1Q. Government expenditure dynamics are also lower, and the negative contribution of inventory built is even more negative.

The supply side has not provided us with notably surprises. There was a deceleration in gross value added in private services, which corresponds with slower private consumption growth. Industry has modestly accelerated compared with the first quarter while construction activity has eased a bit as it was extremely elevated thanks to the warm weather in 1Q. Thus, it only returned to sustainable growth dynamics in 2Q.      

The domestic economy is set to accelerate during the remainder of the year. It should be supported by a revival in the euro area, led by Germany. We expect a reacceleration of household consumption. Investment should maintain sound growth as entrepreneurs will try to increase productivity under pressure to find a suitable labour force. Overall, we expect GDP growth to print 3.0% this year.