Eurozone GDP Grows 0.2% in Q3, Slightly Beating Expectations as Recovery Hints Emerge

Market Overview

The Eurozone economy expanded modestly in the third quarter, growing by 0.2% quarter-on-quarter, according to preliminary data released by Eurostat on Wednesday. The reading slightly exceeded expectations of 0.1%, signaling a tentative improvement in the bloc’s economic momentum ahead of the European Central Bank’s (ECB) policy meeting this week.

On an annual basis, the economy grew 1.3%, down from 1.5% in the previous quarter but still ahead of forecasts for 1.2%. Despite the mild improvement, growth remains fragile as businesses continue to face the effects of high borrowing costs, weak external demand, and lingering trade uncertainty.

Recovery Signs Amid Persistent Challenges

The modest uptick in output suggests the Eurozone may be stabilizing after several quarters of stagnation. Easing inflation—now nearing the ECB’s 2% target—has helped support consumer spending and confidence. Business activity also showed signs of improvement in October, with new orders rising at the fastest pace in over two years, hinting at early recovery momentum entering the fourth quarter.

However, overall conditions remain uneven across member states, with manufacturing still under pressure due to weak global demand and subdued investment.

Country Highlights: France Outperforms

Among the major economies, France delivered a notable upside surprise, with GDP rising 0.5% in the third quarter—more than double the expected 0.2%. According to INSEE, France’s national statistics agency, a 2.2% jump in exports combined with a 0.4% decline in imports made foreign trade the primary growth driver.

Elsewhere in the region, Germany’s economy is expected to remain flat, weighed down by industrial weakness and soft domestic demand, while Italy and Spain posted steady but subdued growth.

ECB Policy Outlook

The ECB, which has already cut interest rates by two percentage points since last year to stimulate growth, is widely expected to hold rates steady at its meeting on Thursday for a third consecutive session. Policymakers are likely to adopt a cautious tone, emphasizing the need to maintain stability while monitoring progress toward sustainable inflation.

Analysts note that with inflation cooling and growth stabilizing, the ECB may shift its focus from aggressive rate adjustments to ensuring liquidity support and balance sheet flexibility through 2025.

What Traders Are Watching

• ECB interest rate decision and President Christine Lagarde’s remarks on growth outlook
• Eurozone inflation and PMI data for signs of further recovery
• Germany’s upcoming industrial output and factory orders figures
• EUR/USD reaction to ECB guidance and macroeconomic signals

Summary

The Eurozone economy posted slightly stronger-than-expected growth in the third quarter, rising 0.2% amid early signs of recovery and easing inflation pressures. France’s robust export performance helped lift overall output, while the ECB is expected to hold rates steady this week as policymakers balance cautious optimism with the need for economic stability heading into year-end.

News FAQ

Q: How much did the Eurozone economy grow in Q3?
Eurozone GDP rose 0.2% quarter-on-quarter and 1.3% year-on-year, slightly above expectations for 0.1% and 1.2%, respectively.

Q: What drove the stronger performance?
The uptick was supported by easing inflation, improving business activity, and stronger export performance, particularly in France.

Q: How did France perform compared to forecasts?
France’s GDP grew 0.5%, outperforming the 0.2% forecast, driven by a 2.2% increase in exports and a decline in imports that boosted trade contribution.

Q: What is expected from the ECB’s policy meeting?
The ECB is widely expected to hold interest rates steady for a third meeting, maintaining a cautious stance as inflation nears its 2% target.

Q: What does this mean for the euro and markets?
A slightly stronger growth reading could lend modest support to the euro, but markets will focus primarily on the ECB’s tone and forward guidance for direction.

Disclaimer

This article is for informational purposes only and does not constitute financial or investment advice. Economic data and market conditions are subject to change without notice. Readers should conduct independent analysis or consult a licensed financial advisor before making investment or trading decisions.