Eurozone Growth Improves as Refugee Tensions Mount

Eurozone economies saw a modest resurgence of growth in the second quarter, but mounting tensions over migrant inflows are steering political focus away from growth.

Exports and consumer spending helped drive European growth higher, according to new statistics from Eurostat, the European Commission’s statistics office. Household consumption rose 0.4% in the second quarter of 2015, while growth in the same period rose 0.3% throughout Europe.

Eurozone economies saw a modest resurgence of growth in the second quarter, but mounting tensions over migrant inflows are steering political focus away from growth.

Exports and consumer spending helped drive European growth higher, according to new statistics from Eurostat, the European Commission’s statistics office. Household consumption rose 0.4% in the second quarter of 2015, while growth in the same period rose 0.3% throughout Europe.

The modest improvement in economic growth was largely expected, as policymakers throughout the Eurozone have revised growth expectations and the European Central Bank asserted the modest economic improvement is likely to continue.

Despite the strength in consumption, investment and inventories saw a slight decline in the second quarter, suggesting that confidence in the economic recovery is weak. Nonetheless, the ECB has held its expectation for continued low growth throughout the Eurozone, as larger economies see higher than 1% year-over-year growth providing the largest contribution to the 19-nation Eurozone region.

In a previous report, Eurostat noted an improvement in retail trade, which rose by 0.4% in the Eurozone and by 0.3% throughout the EU in July. The retail sales index rose by 2.7% in the Eurozone and 3.3% in the EU, indicating growth in retail demand that could continue to bolster the broader economy throughout Europe.

Regional Variations, Italian Strength

One of the strongest performers was Italy, whose GDP rose 0.7% in the second quarter on a year-over-year basis, above 0.5% year-over-year growth predictions that Eurostat set for the Mediterranean country. Meanwhile Germany was one of the best performers, with 1.6% year-over-year growth, followed by France, who saw 1% growth.

Greece, whose economic turmoil had been the focus of debt restructuring agreements earlier in the year, saw its economy rising 1.6% year-over-year.

Refugee Turmoil

While bankers and analysts are cheering the relatively rosy picture that is coming from European economic data, politicians and citizens throughout the Eurozone are focusing more closely on the growing tide of political and economic refugees entering the 28-member European Union.

German Chancellor Angela Merkel and French President Francois Hollande have urged the rest of the EU—including Greece, who failed to receive a bailout just a few months ago due to German protestations—to approve a plan to help process and organize migrants and refugees into the EU. Each nation in the EU would have to take in a certain number of asylum seekers, with a quota upon which each nation would agree.

The proposed plans could cost over 10 billion euros, although estimates vary. In an interview, former U.S. President Bill Clinton urged the world to support Europe in a “concerted global effort” to help refugees coming into Europe from the Middle East, Africa, and Asia.