The economy of the 16 countries that use the euro expanded by a better-than-expected one per cent during the second quarter as growth engine Germany expanded at its fastest pace since reunification two decades ago.

While Malta’s second quarter GDP figures are still to be announced, first quarter growth was close at 0.8 per cent, while growth over the fourth quarter of last year was of one per cent.

This week’s figures show the eurozone growing faster than the US during the quarter, contrary to expectations just a couple of months ago when Europe was threatened by a severe government debt crisis. The US grew by 0.6 per cent during the April to June period from the previous quarter.

The eurozone economy also beat market forecasts for a 0.7 per cent rise and the muted 0.2 per cent growth from the first quarter. Germany, Europe’s biggest economy, led the way as its economy grew by 2.2 per cent in the second quarter as exporters reaped the benefits of a recovery in global demand.

Still, many economists think the second quarter will be as good as it gets for the eurozone this year. Governments across the region – particularly Greece, Spain, Ireland and Portugal – are slashing spending programmes and raising taxes to cut their ballooning debt levels, depriving the economy of stimulus from government spending. Additionally, the US, a major trading partner, is losing momentum.

“The peripheral economies will continue to suffer from fiscal tightening and look set to remain in, or return to, recession,” said Jennifer McKeown, senior European economist at Capital Economics.

“Meanwhile, the German recovery will weaken as global demand slows and its own fiscal consolidation begins next year,” she added.

Figures across Europe show wide divergence in performance.

While Germany is steaming ahead, and France posted a solid 0.6 per cent increase, others like Greece, remain mired in recession. The economy there contracted by 1.5 per cent in the second quarter. And Spain’s modest 0.2 per cent improvement in the quarter won’t do much to get the unemployment rate down from 20 per cent.

Howard Wheeldon, senior strategist at BGC Partners, thinks that this gap between the core and the periphery may cause friction within the single currency area.

“The point is that if Germany is growing on the back of predominantly export led growth and that other eurozone economies are being left out in the cold is a fact that over time is almost bound to create increased friction among smaller eurozone members,” said Wheeldon.

On an annual basis, the figures from statistics agency Eurostat revealed that the eurozone economy grew by 1.7 per cent, up from the 0.6 per cent rate recorded in the first quarter.

The wider 27-country EU, which includes non-euro members such as Britain and Sweden, also grew by a quarterly rate of one per cent for an annual increase of 1.7 per cent.

The Eurostat figures published this week do not include all the economies of the EU. A number, such as Malta, Denmark, Poland, Romania and Finland, have still to pull together quarterly figures.