Euro area Q2 flash GDP came slightly below consensus expectations at 0.3% q/q, after +0.4% q/q in Q1 15. Most of the countries surprised slightly to the downside, with the notable exception of Greece. In Germany, GDP rose by 0.4% q/q -marginally below consensus expectations of 0.5% - supported by solid exports. Net trade was also on the strong side in France (+0.3pp), but this was not enough to offset weaker-than-expected domestic demand: overall growth was flat in Q2 versus expectations of +0.2% q/q after an upwardly revised Q1 at 0.7% q/q. Italian growth came in also a touch below expectations in Q2 at +0.2% q/q, improving by slightly less than in the first quarter. There, domestic demand was the main growth engine according to ISTAT, while net exports support was negative. The Netherlands followed a similar pattern, posting modest growth of 0.1% q/q.

Finally, Greek real GDP surprisingly rose by 0.8% q/q in Q2 against expectations of a fall (consensus: -0.5%, Barclays: -1.1%), while the previous two quarters have been revised up 0.2pp. No details are available at this stage, to gather that private consumption may have been boosted by possibly pre-emptive consumption behaviour as the expectations on bank account freezes and capital controls increased in May/June.

"We also think net trade may have supported growth, with imports likely collapsing while exports are more resilient. These offsetting factors are unlikely to be present in Q3 (and to some extent in Q4), as the imposition of capital controls in early July has affected the capacity of companies to import before exporting. Furthermore, very large falls in business confidence in July also suggest a significant loss of momentum. The possible call for general elections in Q4 15 would also work against restoring confidence", notes Barclays.

Eurostat does not provide any expenditure breakdown at this stage; they will be published on 4 September. However, domestic demand and in particular private consumption were once again the main contributors to GDP growth (+0.3pp). However, domestic demand has likely slowed down from Q1, as the boost from lower oil prices fades and investment failed to gather momentum. Meanwhile, net trade contribution turned positive again (+0.2pp), as euro weakness supported stronger exports and imports held firm.

"We look for a negative inventories contribution to growth. Overall, we retain the view that the euro area economy will grow 1.4% this year and 1.6% in 2016. An important caveat to this moderate growth forecast will be the outlook for global demand, in particular the potentially larger-than-expected slowdown in China and the appreciation pressures on the euro of a weaker CNY that could dampen exports growth", says Barclays.