The euro zone economy grew faster than expected in the third quarter, official data showed on Wednesday, as Germany surprisingly avoided a recession.
According to the EU's official data agency, the eurozone grew by 0.4% in the July-September period compared to the previous quarter. The figure was higher than the 0.2% expected by analysts surveyed by Bloomberg, who had worried that Germany would weigh on the euro zone.
However, Germany's economy expanded by 0.2% quarter-on-quarter, narrowly avoiding a technical recession defined as two consecutive quarters of contraction.
The figures, published a month after Eurostat revised its data to show eurozone growth in the second quarter of this year was just 0.2%, should provide some reassurance.
But analysts expect growth to slow in the final three months of 2024. Policymakers are turning their attention to growth as inflation in the single currency bloc remains below the European Central Bank's 2% target.
The ECB accelerated its interest rate cuts as economists warned that growth in the euro zone next year could be slower 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.
European production has consistently underperformed compared to the more rapidly expanding economies of the United States and China.
The US is expected to report another quarter of strong growth later on Wednesday.
The situation across the euro area was mixed.
Spain, the eurozone's fourth-largest economy, recorded the region's biggest growth rate in the third quarter, growing by 0.8% thanks to increased exports, domestic consumption and a tourism boom.
Meanwhile, production in France saw a welcome boost due to hosting this year's Olympics, with gross domestic product (GDP) increasing by 0.4% in the third quarter.
But Italy stagnated in the third quarter, according to Eurostat data.
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.
“Surveys point to slower growth and fourth-quarter inflation rates that were well below the ECB's expectations, leading to the ECB's decision to cut interest rates by 50 basis points in December,” said Capital Economics' Palmas. I don't think it will be a hindrance.”
