The euro zone economy grew faster than expected from July to September, boosted by Germany's surprise expansion, official data showed on Wednesday, but experts warned that growth would slow in coming months. .
The 20-nation single currency bloc grew by 0.4% in the July-September period compared to the previous three months, the EU's official data agency said.
A boost from the French Olympics and better-than-expected growth in Spain pushed the figure above the 0.2% expected by analysts polled by Bloomberg.
There will be a sense of relief in Europe after concerns that Germany will squeeze the eurozone.
However, European production has consistently underperformed compared to the more rapidly expanding economies of the United States and China.
The U.S. economy grew 0.7% from July to September compared to the previous three months, the Commerce Department said Wednesday.
Analysts expect eurozone growth to slow in the final three months of 2024.
ING Bank's Bart Collaine said Wednesday's numbers were “partly driven by transitory factors”, noting that Ireland's “notoriously volatile” growth had a positive effect. .
“However, for the next few quarters, I think it is reasonable to expect growth to slow again as the outlook remains weak,” Collaine added.
Growth in the euro area was 0.3% in the first three months of this year, but only 0.2% in the previous quarter.
～ECB focuses on growth～
Inflation in the single currency bloc is below the ECB's 2% target, and policymakers have recently turned their attention to growth, accelerating interest rate cuts.
There are concerns that the eurozone economy will not grow as much as expected earlier this year, especially given the multiple challenges for European manufacturing.
The European Commission, the EU's executive body, forecasts growth for the single currency area at 0.8% in 2024, but will update its forecast on November 15.
EU economics chief Paolo Gentiloni said in early October that the bloc's “previous forecast of 0.8% growth[in 2024]is not far from reality.”
Economists also warned that growth in the euro zone next year could be weaker than expected.
“We expect euro area GDP growth to be only 0.7% in 2025, compared to the consensus forecast of 1.3%,” said Franziska Palmas, senior European economist at Capital Economics Research Group. said.
~Get excited about the Olympics~
The situation across the euro area was mixed.
Spain, the eurozone's fourth-largest economy, recorded the region's highest growth rate in the third quarter, growing by 0.8% thanks to increased exports, domestic consumption and a tourism boom.
Germany's economy expanded by an astonishing 0.2% quarter-on-quarter, narrowly avoiding a technical recession defined as two consecutive quarters of contraction.
Meanwhile, production in France rose significantly due to this year's Olympic Games, with gross domestic product (GDP) increasing by 0.4% in the third quarter.
But Italy stagnated in the third quarter, according to Eurostat data.
Hungary fell into recession with production falling by 0.7% between July and September, while Austria, by contrast, grew by 0.3% in the same period.
The 27-nation European Union as a whole recorded growth of 0.3% in the third quarter compared to the previous three months, according to Eurostat.
Looking ahead, attention will be focused on October's euro zone inflation statistics to be released on Thursday, and a slight rise is expected.
Analysts say the ECB is unlikely to stop cutting rates again in December, even if consumer price inflation rises, as inflation is still falling faster than the ECB expected. Showed.
Capital Economics' Palmas said, “Surveys indicate that growth is slowing and inflation in the fourth quarter is significantly lower than the ECB expected, which is why the ECB cut its policy rate by 50 basis points in December. I don't think it will impede that.”
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