Source: The Associated Press

The economy of the 16 countries that use the euro expanded by a better-than-expected 1% during the second quarter as Germany, its main growth engine, saw activity rise at the fastest pace since its reunification two decades ago, official figures showed Friday.

The increase reported by Eurostat, the EU’s statistics office, was higher than market forecasts for a 0.7% rise. Those expectations, however, had been ratcheted up earlier in the morning after Germany reported that its economy grew by 2.2% in the second quarter as exporters, in particular, reaped the benefits of the recovery in global demand.

The figures confirm that the eurozone grew faster than the U.S. during the quarter, contrary to expectations just a couple of months ago when Europe was threatened by a severe government debt crisis. Eurostat said the U.S. economy grew by 0.6% during the April to June period.

Still, many economists think the second quarter will be as good as it gets for the eurozone this year as governments across the region pursue a raft of austerity measures to cut ballooning debt levels and the U.S. economy, a major trading partner, loses 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.

On an annual basis, Eurostat revealed that the eurozone economy grew by 1.7%.

The wider 27-country EU, which includes non-euro members such as Britain and Sweden, also grew by a quarterly rate of 1% for an annual increase of 1.7%.