Eurozone GDP Sees Unexpected Growth, Lifting Euro Prospects

Eurozone GDP Sees Unexpected Growth, Lifting Euro Prospects

Thursday 14th November 2024 – 10:22 (GMT)

The Eurozone economy expanded by 0.4% in Q3 2024, the highest quarterly growth rate in two years, outperforming forecasts of 0.2% and marking an acceleration from the 0.2% gain seen in Q2. Germany, the bloc’s economic anchor, managed modest growth of 0.2%, sidestepping a recession after a revised 0.3% contraction in the previous quarter. Notable growth came from France and Spain, with GDP expanding by 0.4% and 0.8%, respectively, underscoring resilience in key European economies. Ireland and Austria also saw stronger rebounds, with Ireland’s economy surging by 2% after a contraction in Q2.

However, Italy’s economy stalled, flatlining after a 0.2% gain in Q2, while Latvia continued to contract at -0.4%. Year-on-year, Eurozone GDP advanced by 0.9%, marking its best annual performance since early 2023 and surpassing forecasts of 0.8%. The European Central Bank maintains its forecast of 0.8% growth for 2024, although the stronger-than-expected GDP figures could influence expectations for monetary policy adjustments.

The unexpectedly robust growth may support the euro, which has faced downward pressure amid slower inflation and rising geopolitical risks. Stability across major economies, led by Germany’s resilience, could ease fears of a deeper slowdown, strengthening the euro’s position as markets assess potential ECB moves in light of this renewed momentum.