Euro Area GDP Annual Growth Rate Tops Estimates

The Euro Area GDP expanded by 0.8% from the previous year in the first quarter of 2026, the softest pace of expansion since the second quarter of 2024, compared to 1.2% in the previous period and in line with the previous estimate. The slowdown was aligned with the energy crunch from the Middle East following the outbreak of war in the region, which triggered surges in the cost of major energy goods since the start of March. Among the economies for which data is available, the GDP growth slowed in Germany (0.3% vs 0.4% in the previous period), France (1.1% vs 1.3%), Italy (0.7% vs 0.9%), Netherlands (1.2% vs 1.8%), Belgium (0.8% vs 0.9%), Cyprus (3% vs 4.3%), Lithuania (2.5% vs 3.3%) and Austria (0.6% vs 0.7%) and shrank in Ireland (-6.3% vs 3%). On the other hand, GDP growth accelerated in Spain (2.7% vs 2.6%), Estonia (1.3% vs 0.8%), Portugal (2.3% vs 1.9%), Slovakia (0.9% vs 0.8%) and Finland (1.3% vs 0.1%) and steadied for Bulgaria at 2.9%.

The Euro Area GDP expanded by 0.8% from the previous year in the first quarter of 2026, below expectations of a 0.9% growth rate and dropping from the 1.3% last quarter to mark the softest pace of expansion since the second quarter of 2022. The slowdown was aligned with the energy crunch from the Middle East following the outbreak of war in the region, which triggered surges in the cost of major energy goods since the start of March. Lower household consumption was noted among the largest economies of the bloc, with growth slowing for France (1.1% vs 1.3% in 2025Q4), Germany (0.3% vs 0.4%), Italy (0.7% vs 0.9%), and the Netherlands (1.2% vs 1.8%). Spain remained the outperformer in GDP growth, expanding 2.7% from the 2.6% last quarter.

The Euro Area economy grew 1.2% year-on-year in the fourth quarter of 2025, revised down from an initial estimate of 1.3%. The figure marks the slowest annual growth in more than a year, easing from a 1.4% expansion in the previous quarter. All spending categories showed slower growth: household spending (1.3% vs 1.4%), government expenditure (1.4% vs 1.5%), gross fixed capital formation (3.1% vs 3.3%), exports (2.4% vs 2.9%) and imports (3.9% vs 4.2%). Exports made the largest upward contribution (1.2 pp), followed by consumer spending (0.7 pp) and investment (0.7 pp). Among member states, Malta recorded the largest growth rate (6.4%), followed by Cyprus (4.5%). Germany expanded 0.4%, France 1.2%, Italy 0.8% and Spain 2.6%. For 2025 as a whole, Euro Area GDP grew by 1.4%, slightly less than early estimates of 1.5%. Looking ahead, both the European Central Bank and the European Commission forecast economic growth of 1.2% in 2026, followed by 1.4% in 2027.