Eurozone growth of 0.4% in third quarter beats forecasts despite slowing
Key Facts
Eurozone gross domestic product grew 0.4% in the third quarter of 2026, beating economists’ forecasts of 0.2% in a Reuters poll, according to Reuters via MarketScreener. However, growth slowed from 0.6% in the previous quarter, which the agency described as exceptionally strong. The reading points to continued economic expansion, but at a slower pace than the bloc recorded three months earlier. The positive surprise against forecasts came as performance remained uneven across member economies. Country-level details show that the headline figure alone does not reflect the breadth of economic activity across the region.
Irish growth was one factor lifting the bloc’s reading, with Ireland’s gross domestic product expanding 5.5% in the third quarter, according to the Associated Press. By contrast, the eurozone excluding Ireland grew 0.2%, illustrating the gap between the headline figure and the performance of the rest of the bloc. The bloc’s growth beating expectations thus coincided with a weaker reading when Ireland’s economy is excluded. This divergence puts the effect of one country’s contribution to the region-wide result in context. Germany’s economy also grew 0.2% quarter on quarter in the third quarter, according to Germany’s Federal Statistical Office, a rate consistent with the eurozone reading excluding Ireland.
In Germany, final consumption expenditure rose slightly in the third quarter, while preliminary data pointed to a decline in capital formation and weaker export momentum, according to the Federal Statistical Office. These components show a mix of limited support from consumption and weakness in other parts of activity. Across the eurozone, Reuters said investment spending and consumption continued to support growth. It added that heavy spending on artificial intelligence, defense and infrastructure supported investment, strong external demand helped industry, and households continued to spend. A Capital Economics economist said, according to the Associated Press, that "households and businesses have not cut spending because of the Iran war."
The activity reading comes as the European Central Bank left its key interest rates unchanged on October 29. The deposit facility rate was 2.50%, the main refinancing operations rate 2.65%, and the marginal lending facility rate 2.90%, according to the bank’s statement. The bank said energy prices continued to rise, increasing inflation risks and weighing on growth prospects. This leaves policymakers facing simultaneous risks to both prices and economic activity. The hold means all three interest rates remained at their announced levels despite those risks.
In currency markets, the euro rose 0.20% to 1.1203 dollars in trading on October 30, according to data published by Investing.com. This move relates to the October 30 session and is not a verified price for November 2. The recorded move represents the market response available in the data following the release of growth indicators, without establishing a subsequent path for the currency on its own. Markets are watching the next milestone on November 4, when the eurozone’s preliminary October inflation estimate is due, according to Eurostat’s schedule. The GDP review follows on November 13, providing an opportunity to assess the preliminary growth estimate.