The eurozone economy overcame uncertainty about the course and consequences of the conflict in the Middle East to outpace its U.S. counterpart during the three months through June.

Gross domestic product in the 21-nation currency area rose 0.4% in the three months through June, the European Union's statistics agency said Thursday. This compares with zero growth in the first quarter, and came in higher than a consensus of economists polled by The Wall Street Journal, which expected 0.2% growth.

The economy grew 1.8% on an annualized basis, outpacing growth in the U.S. which came in at 1.5% in the quarter. The last time the eurozone grew faster than the U.S. was in the fourth quarter of 2025.

Despite continued supply-chain disruptions and higher energy prices, driven by the U.S. and Israel war on Iran, economies across the eurozone have proved more resilient than many economists feared following the outbreak of the conflict earlier this year.

The energy crisis comes as the latest setback for the eurozone economy, which has struggled to gain momentum in recent years. Repeated economic shocks, from Russia's invasion of Ukraine to U.S. President Trump's tariffs, have left economic sentiment and activity at historic lows.

"The continued steady growth of the eurozone economy in 2Q shows that households and businesses have not pared back their spending much due to the Iran war," said Andrew Kenningham, chief Europe economist at Capital Economics.

In June, domestic demand was supported by easing inflation as an initial ceasefire between the U.S. and Iran drove energy prices lower. Meanwhile, manufacturing activity proved resilient to volatility over the quarter.

Growth was also boosted by a rebound in notoriously volatile Ireland, which jumped 3.9% in the quarter compared with a 7% contraction in the first three months of the year.

There were signs that the eurozone economy is being boosted by services related to artificial intelligence. Ireland hosts the international headquarters of a number of large U.S. technology companies, and its second-quarter jump was driven by the information and communications sector.

"Digital services have been robust, in part owing to the increasing contribution from AI-related activity," European Central Bank President Christine Lagarde said last week.

The German economy rose 0.2% in the three months through June compared with upwardly revised 0.4% growth in the first quarter. The French economy rose 0.2%, rebounding from a 0.1% contraction in the first quarter, while Spain's grew 0.7%, up from 0.6%.

In Germany, some industrial sectors continue to benefit from the fact that Asian competitors were hit harder by disruption in the Middle East, according to ING economist Carsten Brzeski.

Spain's economy continues to outperform the wider eurozone, supported by a booming tourism sector, strong investment and robust employment growth fueled in part by higher immigration.

Still, growth in the eurozone remains on shaky ground. While Middle East tensions calmed in June, a breakdown in negotiations and escalation of attacks this month threaten to weigh further on the economy ahead.

The economy also faces a significant drag from wildfires as a record-breaking heatwave continues to spread across Europe.

France's finance minister, Roland Lescure, this week described the fires as an "economic thunderbolt."

"The wildfires affecting parts of southern Europe are a stark reminder that climate change is reshaping economic as well as environmental risk…the effects are increasingly felt through disruptions to production, tourism flows, transport, and supply chain bottlenecks," said Daniel Parker, senior economist at Oxford Economics.

The European Central Bank last month cut its expectations for growth this year and next amid a hit to real incomes and confidence from the Middle East war. An expected pickup in growth in the second quarter suggests the economy might be holding up better than the central bank feared, although it warned last week that growth could be weaker and inflation is likely to be higher if the conflict drags on.

The ECB voted unanimously to hold interest rates at 2.25% last week, following a hike in June. While the central bank moved faster than the Federal Reserve or the Bank of England to tame inflation, it has noted little evidence so far of second-round price effects stemming from the energy crisis.

On Wednesday, the ECB's wage tracker continued to anticipate slower pay growth this year due to weak near-term growth momentum, depressed confidence and high uncertainty.

While most investors expect the ECB to raise its key interest rate for a second time since the conflict began when policymakers meet in September, economists have warned that further monetary tightening could weigh on an already fragile economic outlook.

In addition to rising energy prices, the eurozone also faces the revived threat of additional tariffs from the U.S.

Still, growth could continue on a path of resilience, Capital Economics' Kenningham said.

"Looking ahead, we suspect that the eurozone will continue to weather the Iran energy shock reasonably well and are forecasting GDP growth of around 0.25% per quarter for the next year or so," he said.