The eurozone economy grew by more than previously reported in the third quarter, likely keeping the European Central Bank on hold for the immediate future.
The eurozone economy grew by more than previously reported in the third quarter, likely keeping the European Central Bank on hold for the immediate future.
The 20 nations sharing the euro currency saw their economy expand by 0.3% in the third quarter compared with the previous three months, Eurostat data confirmed earlier Friday, above the 0.2% growth previously seen.
On an annual basis, the eurozone grew by 1.4% in the third quarter, a slowing from 1.5% growth the prior quarter.
“Despite the many headwinds, 2025 has been a year of resilience and hope for the eurozone economy,” said analysts at ABN Amro, in a note.
“U.S. tariffs have left their mark, and will continue to do so next year in the form of weak export growth … Yet, despite the U.S. tariff shock, the eurozone comfortably dodged a recession, and has so far defied expectations for a bigger slowdown.”
“We now expect the economy to have grown 1.4% in 2025,” added ABN. “Looking ahead, the ramp-up in German fiscal spending, alongside improving domestic demand (helped by ECB rate cuts) should see growth accelerate in 2026.”
The ECB cut rates by a combined two percentage points in the year to June to help boost growth, but policymakers have decided to keep interest rates unchanged since then as inflation has largely fallen back largely to target.
"The ECB is expected to stay on hold through 2026-7. Near term risks are tilted to another cut given the looming inflation undershoot, but those risks could tilt towards a hike as 2027 develops," ABN added.
That said, in the near-term there remain downside risks to the outlook.
The recovery of the dominant German economy will remain subdued next year as exports struggle and global trade slows, according to a forecast by the German Economic Institute IW, released earlier Friday.
The IW forecasts Germany’s real gross domestic product to grow only slightly this year, by 0.1% after two years of contraction, before hitting 0.9% next year, marking a notable increase.
Germany is "emerging somewhat from its state of shock," IW chief economist Michael Groemling said.