Eurozone Q3 Growth Again Exceeds Expectations

According to Jin10, Eurostat data released Friday showed that the Eurozone economy grew faster than expected in the third quarter. Resilient investment and consumption helped the economy withstand pressure from high energy prices. The economy grew 0.4% quarter over quarter, below the unusually strong 0.6% growth in the second quarter but above economists’ 0.2% forecast. Year over year, growth was 1.3%, exceeding the 1.1% forecast and broadly matching the economy’s “potential growth” level—the rate it can achieve without stimulus. Although the Eurozone’s growth rate was less than half that of the United States, the result was far better than the pessimistic forecasts made by markets after the Iran war began. Large spending in artificial intelligence, defense, and infrastructure boosted investment, strong overseas demand supported industrial production, and households continued to consume while further reducing their already high savings rate. This performance prompted markets to repeatedly raise their growth forecasts this year. Most forecasters now expect the Eurozone economy to grow by more than 1% this year and accelerate further in 2027.